Brenda Vingiello, Sand Hill’s Chief Investment Officer, joined Squawk Box to discuss her thoughts on the latest market trends and market outlook for 2025. This
Depreciation and Section 179 Expensing
The tax law allows companies to immediately write off 100% of equipment purchases.
One of the most impactful provisions of the new tax law for mid to large size businesses is that equipment purchases can be deducted immediately, and for the full amount of the purchase, in the first year of its use. In other words, no more expensing of the purchase over a period of years using depreciation schedules. This new provision is designed to encourage up-front spending on any type of equipment, in the hopes of further improving output and productivity to stimulate the economy. However, this provision is temporary, and a phase out schedule begins in January of 2023 as follows:
- 100% for property placed in service after Sept. 27, 2017 and before Jan. 1, 2023;
- 80% for property placed in service during calendar year 2023;
- 60% for property placed in service during calendar year 2024;
- 40% for property placed in service during calendar year 2025;
- 20% for property placed in service during calendar year 2026.
This 100% “fully expensed” accounting change until January 2023, is meant to stir economic activity sooner rather than later. Moreover, many small businesses had already been getting similar 100% deduction treatment, and those rules were kept in place and do not change (except for real estate firms).
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