TCJA’s Bonus Depreciation Expansion: Invigorating Small Business, Stimulating the Economy
Any business owner can attest that how much they have to pay in taxes is on their mind 24/7.
As bankers, we understand the challenging reality is that income taxes play into a business owner and operator’s decisions to reinvest in their business. Tax planning influences the important decisions you must make, decisions that ultimately impact your employees and customers. They can sway your confidence in the economy and impede your ability to thrive in the current economic climate.
Currently, you might have your eye on a new or used equipment purchase like a vehicle, machinery or office furniture. Maybe upgrading your computer and software system is long overdue. Or you’ve set your sights on making much-needed capital improvements to your nonresidential building space like roofing, HVAC, fire and alarm systems or even installing an elevator or escalator.
The truth is that if you can’t make these occasional investments, it makes it that much harder for your business to succeed.
Leverage the Tax Cuts And Jobs Act To Help Your Small Business
Putting partisan politics aside, elements of the Tax Cuts and Jobs Act (TCJA) that was passed in December 2017, may make this the right time to invest in fixed assets for your business while simultaneously lowering your tax bill. The new law provides for meaningful tax relief for certain tax payers by enhancing some tax breaks, while eliminating – or reducing – other taxes affecting the business community.
One of the most significant ways TCJA can help businesses – and small businesses in particular – is by expanding the federal bonus depreciation from 50% to 100% for new and used qualified property that is put in service between September 28, 2017 and December 31, 2023.
What Is Federal Bonus Depreciation?
What does this mean? This tax saving tool allows businesses to take a 100% expense deduction for the purchase of any new and used property that qualifies under the bonus depreciation provision. Business leaders and elected officials alike recognize this type of real tax relief can stimulate the economy, create jobs, increase wages and spark investment.
So, with the wind-down of bonus depreciation to start in 2023 (20 percentage points per year), now is the time for businesses to secure the full benefits of this expanded tax deduction.
United Bank Can Help You Leverage TCJA
Why is a banker offering mindful insight about the expanded bonus depreciation? First, United Bank (bankatunited.com
) provides equipment loans to small businesses
and is positioned to be a key strategic partner in helping you leverage this tax relief benefit for your business. Second, when businesses succeed, the communities where we do business succeed along with it.
But just don’t take our word for it. If you haven’t done so yet, we encourage you to check with your tax professional and come up with a tax planning strategy that may include taking advantage of the expanded bonus depreciation. Not only does it have the potential to invigorate your business, it may stimulate the local economy at the same time.
, Tax Partner at Blum Shapiro
explained, “The new tax depreciation rules favor the taxpayer in letting them currently deduct capital assets purchased. In addition, the bonus depreciation rules now allow you to include used equipment purchased. This is a tremendous benefit to the taxpayer compared to prior years when used equipment was not afforded the bonus depreciation deduction.”
United Bank Knows Small Business Loans
United Bank is excited about our new platform which will digitize the entire small business lending experience. We have begun to rollout our digital platform through United’s IQ team which provides a quick and easy customer experience for all business and consumer banking needs. If you’d like to pursue an equipment financing solution for your business in order to take advantage of the potentially favorable change in tax laws, please visit us online
and click “Apply Now”; call us at 866-959-BANK
; or stop by any of our more than 50 branches
As the old cynical saying goes, “A person doesn't know how much they have to be thankful for until they have to pay taxes on it.” Thanks to the TCJA and the expanded bonus deprecation provision, small businesses that wisely take advantage of it may well be thankful for the capital assets they have while getting an early 100% write off the cost along with it.
To learn more about the expanded bonus depreciation tax benefit, visit the Internal Revenue Service’s website at www.irs.gov.
United Bank is a leading community bank in New England, with over 50 banking locations.
Banking, mortgage and home equity products offered by United Bank, Members FDIC. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. United Bank does not offer tax or legal advice – this article should be considered as an educational offering to the general public, and should not be construed as advocating a tax or legal strategy. Please contact your tax advisor, accountant or lawyer before taking any action.
About the Author: Michael Desimone is a Senior Vice President and Head of IQ at United Bank. IQ is a one-stop, customer-centric fulfillment center that serves the banking and lending needs of consumers and community businesses. You can learn more about United Bank, headquartered in Hartford, Connecticut, by visiting www.bankatunited.com.