Capital for the LHPH Industry

Creating financial flexibility one dealer at a time

Bonus Depreciation vs. Straight-Line Depreciation

Eyo Toe | November 23, 2021 

Federal income tax deferment is an advantageous benefit to having a leasing program. In 2018, the Tax Cut and Jobs Act gave LHPH dealers the opportunity to use bonus depreciation, the ability to depreciate 100% of used vehicle assets originated between now and 2023. After 2023 the 100% bonus depreciation will decrease 20% per year.

Straight-line depreciation is an alternative method to spreading your asset depreciation over a period of time. In the example above, the graph visually represents the differences between bonus depreciation and straight-line depreciation for one vehicle. Your CPA can help you decide with method of depreciation would be the most beneficial for your dealership.

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