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Bush tax cut increases expensing of business-use trucks

November 23, 2010
The federal government's third-largest tax cut ever, signed May 28 by President Bush, impacts business expensing and depreciation treated in Section 179 of the Tax Code. Small businesses may expense $100,000 (up from $25,000) of new equipment purchases annually for property placed in service beginning in taxable years 2003, 2004 and 2005. In addition, the bill increases the Section 179 phase out threshold for new equipment purchases from the current $200,000 to $400,000 in those years. Under this provision, a small business has the ability to immediately expense (up to $100,000) business-use SUVs, trucks and vans with a gross vehicle weight of more than 6,000 pounds. Bonus depreciation All businesses may take a 50 percent depreciation deduction, up from 30 percent, for new equipment and other capital investments made after May 5, 2003, and before Jan. 1, 2005. Under the provision, a business may take a first-year, 50 percent bonus depreciation for new passenger automobiles, SUVs, trucks and vans. For such vehicles with a gross weight less than 6,000 pounds, and for new passenger automobiles of less than 6,000 pounds unloaded gross vehicle weight, the first-year depreciation limit for those vehicles, in the case of 50 percent bonus depreciation property, is $10,710.