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.