{"id":17024,"date":"2020-10-16T08:38:08","date_gmt":"2020-10-16T12:38:08","guid":{"rendered":"https:\/\/www.foundationsoft.com\/?p=17024"},"modified":"2025-09-22T08:17:02","modified_gmt":"2025-09-22T12:17:02","slug":"maximizing-deductions-with-the-tax-cuts-and-jobs-act-section-179-vs-bonus-depreciation","status":"publish","type":"post","link":"https:\/\/www.foundationsoft.com\/learn\/maximizing-deductions-with-the-tax-cuts-and-jobs-act-section-179-vs-bonus-depreciation\/","title":{"rendered":"Maximizing Deductions with the Tax Cuts and Jobs Act: Section 179 vs. Bonus Depreciation"},"content":{"rendered":"

Signed into law on December 2017, the Tax Cuts and Jobs Act \u2014 or TCJA, as it\u2019s commonly abbreviated \u2014 represents the biggest overhaul of the US tax code in recent history. While the TCJA introduced new guidelines to deductions typically claimed through Section 179<\/strong><\/a>, it also provides business owners with additional options for claiming bonus depreciation on qualifying purchases \u2014 including deductions on new software purchases for their businesses.<\/p>\n

\"eBook<\/a><\/p>\n

As a result, business owners now have more options than ever when it comes to claiming deductions on purchases for their businesses. But to do so effectively, it\u2019s necessary to understand the differences between Section 179 and bonus depreciation under the TCJA.<\/p>\n\n

What\u2019s the difference between Section 179 and bonus depreciation through the TCJA?<\/strong><\/h6>\n
\n
<\/div>\n
Section 179<\/div>\n
Bonus Depreciation<\/div>\n<\/header>\n
\n
\n
Deductions for Software<\/div>\n
Yes. New software purchases qualify.<\/div>\n
Yes. New software purchases qualify.<\/div>\n<\/div>\n
\n
Deduction Limits<\/div>\n
Yes. $1.22 million within a single year, with yearly increases to compensate for inflation.<\/div>\n
No. No limits on deduction claims.<\/div>\n<\/div>\n
\n
Claim Limited to Income<\/div>\n
Yes. Deduction claims are limited to less than annual income.<\/div>\n
No. Deduction claims aren\u2019t limited by annual income.<\/div>\n<\/div>\n
\n
Real Estate Improvements<\/div>\n
Yes. Can be claimed for improvements to property.<\/div>\n
No. Improvements to real estate are not covered.<\/div>\n<\/div>\n
\n
Split Claims Over Time<\/div>\n
Yes. Claims can be partially split so some deductions can be taken now and others can be expensed in later years.<\/div>\n
No. All bonus depreciation must be claimed in the tax year when the purchase was made.<\/div>\n<\/div>\n
\n
Expiring Returns<\/div>\n
No. New deductions can be claimed yearly with the same stipulations.<\/div>\n
Yes. 100% bonus depreciation is only available until 2022. Starting in 2023, 20% decreases occur yearly.<\/div>\n<\/div>\n<\/div>\n<\/div>\n

<\/span>Section 179:<\/strong><\/span><\/h3>\n