New Tax Provides Bonus Depreciation
President Bush has signed into law tax legislation that includes bonus depreciation allowances for new property and equipment, including vehicles. The provision allows an additional first-year depreciation deduction equal to 30 percent of the adjusted basis of the vehicle. The provision applies to vehicles acquired after Sept. 10, 2001 and before Sept. 11, 2004, provided no written contract for acquisition was in effect before Sept. 11, 2001. For fleet vehicles subject to the limitation on the amount of depreciation deduction allowed with respect to certain passenger vehicles, the allowed amount is increased by $4,600 to $7,660. The National Association of Fleet Administrators (NAFA) states that fleets that lease vehicles should check with their leasing company to determine if the increase in allowed depreciation will be reflected in lower lease rates. Leasing companies are not limited in the amount of depreciation allowed in the first year.