Luxury Auto Limits for Business Autos
The 2018 tax bill increased the luxury auto depreciation deduction limits for the 1st, 2nd, 3rd and subsequent years with the year first increased to $10,000 and the second year to $16,000.
What is a Luxury Auto?
The IRS definition of a "luxury vehicle," is a four-wheeled vehicle regardless the cost of the vehicle, used mostly on public roads, and has an unloaded gross weight of no more than 6,000 pounds.
What is the Corporate Tax Savings?
The most dramatic changes made by the 2018 Tax bill is on the corporate rate. For starters, the bill lowers the corporate tax rate to a flat 21% on all profits from 35% through January 1, 2026. This is not only a massive tax-cut, but is a major simplification as compared to the 2017 corporate tax rates. The flat 21% corporate tax change can save an entity up to $10,500.00 in corporate taxes for an auto costing $50,000.
Here is an example of a Luxury Auto costing $50,000 and put in services on January 1, 2018. Notice, the tax saving is $10,500 over five and half years and resulting in the actual cost to $39,500 net of corporate taxes.
If you have questions about your Luxury Auto tax saving for a corporation, please give this office a call at 301-962-1700.
H.R.1 - An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for the fiscal year 2018.
