If you own a small business, you can generally instantly deduct 100% of the cost of most new and used personal property (non-real estate) assets in the year you place them in service. You can now deduct up to $108,000 for tax year beginning in 2006 (subject to a taxable income limitation and another limitation if you add over $430,000 or qualifying assets during the same tax year). Computer Software is also eligible for the Section 179 deduction.
An Exception applies to the purchase of SUV’s which were placed in service after October 22, 2004. Businesses can not take a first year deduction of more than $25,000 for an SUV placed in service after October 22,2004.
The Section 179 deduction will go back to $25,000 for tax years beginning in 2010 and beyond.
BONUS DEPRECIATION
For qualifying assets acquired after May 5, 2003 and before 2005 (and placed in service before 2005, or January 1, 2006 for certain assets with long production periods), you can deduct 50% of cost in the first year as bonus depreciation. This break is available regardless of the size of your business.
Under the bonus depreciation rules you can deduct up to $10,710 worth of first-year depreciation for new (not used) vehicles acquired after May 5, 2003. For new autos acquired before May 6, 2003, the maximum first-year depreciation deduction is only $7,660. For used vehicles placed in service at any time during 2003 the maximum first-year depreciation deduction remains at $3,060.