When making a large purchase for your business, such as with equipment, furniture, vehicles, or qualified improvements, you generally have to depreciate it over time. However, with the new tax law changes, the way you depreciate it is different.
The old law allowed you to depreciate 40% of the cost of a qualified asset in the first year. Although this is beneficial, you must depreciate the remainder of the cost over the life of the asset, which can be many years. With the new tax law changes, you can now depreciate 100% of the purchase of a qualified asset in the first year you place it in service. The asset must have been purchased after January 19, 2025.
The good news is that this tax law change has been made permanent, which makes it easier and more beneficial for businesses to make large asset purchases.
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