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Bonus Depreciation and Section 179

Bonus Depreciation offers businesses an additional first-year depreciation benefit, allowing them to deduct a larger portion of the cost of qualifying asset beyond traditional depreciation allowances.

Under Section 179, you can capitalize the asset and deduct the full cost in the first year, reducing your taxable income and increasing your potential savings. In many cases, the resulting tax savings can exceed the payments, making this a bottom-line friendly deduction.

How can both deductions work together?

While each deduction can help businesses deduct purchasing costs for their assets, combining them can offer the ultimate benefits. IRS rules require that most businesses apply Section 179 first, followed by bonus depreciation.

Tax Lease Benefits

Leasing may be used as an interim tax benefit. Northland Capital retains ownership of the asset while you benefit by expensing the payments as a general operating cost. In many cases, the entire payment may qualify as a fully deductible expense, helping reduce your taxable income.

Learn more on how a tax lease could work for you.

Traditional Depreciation

Let’s say you purchase an asset for $200,000, it will typically depreciate, or lose value, over its useful life. Most assets have a lifespan of five to seven years. Under traditional straight-line depreciation, the asset depreciates at a faster rate in the earlier years, allowing for larger deductions upfront.

What Are My Tax Savings?

There are limits, so consult with your tax advisor to understand the full impact of these options and how Section 179 can benefit you.