Bonus Depreciation Update For Vehicles & Cost Seg

Now that 60% bonus depreciation is confirmed for 2024 I've been getting questions on what the new rate is and how it impacts things like heavy SUV's or cost seg studies.

Here's what you need to know:

The bonus depreciation rate for 2024 is 60%. It then drops to 40% in 2025, 20% in 2026 and then it's phased out unless new proposed changes are made. As of now, plan on the rates listed above.

So if you buy a heavy SUV for business in 2024, your max bonus deduction for the year is 60% which can still make a lot of sense as a great deduction for many of you.

Bonus depreciation also impacts cost seg studies. Any properties placed into service this year (2024) get 60%.

But what about properties bought in 2023 or 2022?

If you decide to do a cost seg for a property purchased and placed into service in a prior year, that property gets to take the bonus depreciation rate that was in effect in that year. Cost seg is based on the year the property is placed into service.

So if you bought a property in 2022 but perform the cost seg this year in 2024, you're entitled to 100% bonus depreciation rather than 60%. This can be substantial tax savings.

For many of you who have rentals, we've set up these projections already, but if you are interested in talking more, please reach out so we can run some numbers and see what tax savings look like.