How Changes to Depreciation Under the Tax Cuts and Jobs Act Affect Businesses

By Jo McClure, CPP on May 09, 2018
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The Tax Cuts and Jobs Act (TCJA), designed to boost the economy and create jobs, took effect January 2018. As one of the largest overhauls to the tax system since the Reagan years, many business owners are still learning how it affects them. For example, many wonder how it impacts their depreciation deductions and taxes.

According to the Internal Revenue Service (IRS), business taxpayers can generally depreciate tangible property including buildings, machinery, vehicles, furniture and equipment, excluding land.

How Changes to Depreciation Affect Businesses Under the New Law

Businesses can immediately expense more; taxpayers may elect to expense the cost of any property and deduct it in the year placed in service.
The maximum deduction increased from $500,000 to $1 million.
The phase-out threshold increased from $2 million to $2.5 million.
Taxpayers can elect to include nonresidential property improvements made after the date the property was first placed in service.

Qualifying Nonresidential Improvements

Any improvement to a building’s interior
Roofs
Heating and air conditioning systems
Fire protection systems
Alarm and security systems

Excluded Improvements

Enlargement of the building
Service to elevators or escalators
Internal structural framework of the building

These changes apply to property placed in service in taxable years beginning after December 31, 2017. Visit http://bit.ly/2IrGk6y for more information provided by the IRS.

Small businesses oftentimes fall victim to tax errors because they don't have enough human resources or internal expertise when handling tax filings. Axcet HR Solutions’ payroll administration team are experts in tax administration. Find out the top five tax mistakes small businesses make and how a professional employer organization (PEO) can help in our FREE report.

For more information check out How the Tax Cuts and Jobs Act Affects Businesses.

Written by

Jo McClure, CPP

Jo McClure, CPP, is the Director of Payroll Administration at Axcet HR Solutions, where she has been a pivotal leader for over 20 years. With more than two decades of experience in payroll outsourcing and professional employer organizations (PEOs), Jo specializes in helping small to mid-sized businesses navigate payroll administration, employee benefits, and compliance. Her strategic leadership at Axcet focuses on implementing best practices in payroll management, compliance auditing, and risk mitigation. Jo obtained her Certified Payroll Professional (CPP) designation in 2006 and has held numerous leadership roles in the Greater Kansas City Chapter of the American Payroll Association, including President, Vice President, and Chapter Coordinator. A frequent speaker at the Midwest Regional Payroll Conference, she has also contributed articles to publications such as *Thinking Bigger Business* and *Kansas City Small Business Monthly*. Jo’s specialties include payroll implementation, compliance auditing, and crafting best-practice payroll solutions that ensure businesses stay compliant while optimizing their processes.

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How Changes to Depreciation Under the Tax Cuts and Jobs Act Affect Businesses

Jo McClure, CPP

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How Changes to Depreciation Under the Tax Cuts and Jobs Act Affect Businesses

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