Time is running out for people to take advantage of tax deductions for this year's taxes. 2018 is the first year for the tax changes for business owners outlined in President Donald Trump's Tax and Jobs Act. According to Lithia Chrysler Jeep Of Reno car sales consultant Derric Williford, December is a popular time for business owners to make their way down to car dealerships. “15 to 20 percent are gifts this time of year. But a lot of people are buying it under business for taxes. Christmas and the week after are popular for buying cars,” said Williford.
Recent changes to the tax law have especially made it appealing for business owners to buy vehicles. “Congress has increased the depreciation levels from 10,000 to 18,000 which includes the section 179 write off as well as the bonus depreciation,” said CPA Mark Robertson. This means that if you are a business owner who buys a vehicle this year that up to $18,000 of that vehicle is tax deductible based on the amount of business use. “If you use the car 80% of the time, then the get 80% of that deduction,” said Robertson.
The business owner’s tax bracket also determines the amount of the tax deduction. “33% of 18,000 would be around $5,400 dollars,” said Robertson. There are also changes in tax deduction for buyers of SUVs. “What they did do is increase the bonus deduction to 100 percent for amounts under $25,000,” said Robertson. These expanded deductions however, only apply to business owners or self-employed independent contractors. “Unfortunately it’s not going to benefit people who work for businesses anymore, because they have eliminated the employee business expenses. People used to be able to do that before but now that deduction is gone,” said Robertson. The Tax and Jobs Act that makes this possible runs through 2024.