In December 2015, business leaders everywhere breathed a collective sigh of relief when Congress passed the Protecting Americans from Tax Hikes (PATH), which extended bonus depreciation until 2019. Why? Because this bonus reduction extension is expected to be a boon for the trucking industry, unlike extensions passed previously that failed to provide much of a benefit to truckers.
The Talk of the Town: What IS the Reduction, Anyway?
Simply put, the PATH Act gives truckers sufficient time to think for the future. The total tax reduction for property acquired and put into use from 2015 to 2017 was 50%, and will shrink further down to 40% by next year. The reduction will fall to 30% in 2019, after which it will completely disappear.
Who Can Benefit?
A great majority of businesses and fleets will benefit from the persistent bonus distribution that will stay in place for a fixed period. It will help fleets to perform and manage a pre-tax planning setup so that they are well-prepared for any money-related troubles and will not have the headache of dealing with them after the fact.
Eligible Parties
Every party that is new to the trucking business is eligible for this huge tax benefit. Those who have used trucks in the past (from 2015 to 2017) are not eligible to for this bonus reduction.
The biggest benefit for fleets will be the necessary alterations in their trade cycles and the focus should be more on being active in 2018 and 2019.
Equally Beneficial for Customers
Many customers who make purchases on the dealership side can benefit from the revised leasing divisions made by retailers.
Necessary Tip for All Businesses
Every fleet business, whether it is a conglomerate or a small business, can save the money from the bonus depreciation deduction throughout the years and invest in other lucrative ventures. Then after 2019, when the bonus depreciation is gone, those businesses can effectively manage the cash flow.
Those who were expecting a one-year extension can make further changes in their excise department. This bonus depreciation deduction is quite impressive and influential even with the shortening of percentages.
Final Thoughts
Bonus Depreciation- A Wave of Fresh Air
The bonus depreciation deduction defined by the Congress is a safe haven for those fleet businesses who want to save a considerable amount of money. A bonus reduction that will fall to 30% by 2019 will allow these businesses to make appropriate planning for leasing procedures. With the new tax relief policy, they can carefully weigh all the pros and cons and meticulously create a plan with enormous potential to be successful. They will also be able to keep a fixed amount of money, which could potentially help them to greatly expand their business.
