The great part about both Section 179 and bonus depreciation is that they’re both accelerated deductions meant to allow your business more control of its taxable income. You can use just one, or both, giving your business flexibility with how it wants to manage the books. Both tax regulations are applicable to new and used assets, and there are no limitations on deductions for significant assets placed in service later in the year.
Do keep in mind you will recognize the same net income regardless of which method you choose, and once you’ve taken the big deduction you’ll still have the remaining years of income to pay taxes on. If your portfolio of depreciable assets starts to decline, your tax related liability could become substantial. To avoid this, know when you will have to pay the tax so you can align your depreciable assets in a way that will allow for consistent cash flow. To learn further details regarding Section 179 and bonus depreciation, review the IRS’s new rules and limitations.
For a more in-depth explanation of Section 179 and how to know if you qualify, read our Section 179 Tax Deduction article.