Tax Bill Includes Bonus Depreciation
The tax bill signed by President Obama and passed by Congress to keep the nation from going over a “fiscal cliff” allows fleets to deduct 50% of the cost of new trucks and other equipment in 2013.
Known as bonus depreciation, the practice is designed to help the nation’s manufacturing sector recover from the recession.
In 2011, the stimulus measure allowed a 100% deduction for equipment purchases in the same year the purchases were made. In 2012 the write-off dropped to 50% and would have expired altogether on Dec. 31.
Bonus depreciation is credited with helping boost truck sales as the country and the trucking industry climbed out of the recession that began in 2008.
In another trucking-related provision, Congress also extended the $1-a-gallon tax credit to producers of biodiesel.
The tax credit helps keep the higher cost of biodiesel fuel competitive with regular diesel. Production was imperiled three years ago when Congress allowed the tax credit to lapse and several producers went out of business.
The new tax bill, which passed in the Senate Monday and in the House Tuesday, raises taxes on the highest income earners but makes the Bush-era tax cuts permanent for those families with incomes of less than $450,000.
Had Congress not acted, the Bush tax cuts would have expired this month.
At the same time, a series of automatic federal spending cuts were to have occurred this month, but Congress’ deal to avoid the fiscal cliff put off budget-cutting decisions for at least two months.
