How the 2018 Tax Reform Affects Your Fleet
New tax law changes have strengthened the value of leasing a fleet, making it even more attractive in most cases than owning. At Ryder, we completed a deep analysis of our Ryder ChoiceLease product. In addition to the cost of a lease going down, the reduction in the tax rate makes leasing a more financially sound decision because the lower tax rate translates into a diminished tax shield.
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How to Maximize the New Tax Reform to Benefit Your Fleet
In this report, you will learn how the new tax reform affects fleets, how you can benefit from savings now available through tax reform, and why leasing is more financially and operationally attractive than owning your vehicles.
New Tax Law Changes
Tax law changes have been made to both individual and corporate tax rates. Here is a brief overview of the changes that affect fleets:
- The corporate tax is now a single flat tax rate of 21 percent. This replaces the previous tax rates, which ranged up to 35 percent, and varied by business
- For pass-through business income, the tax burden has been lowered through a 20 percent deduction
- Companies can now depreciate 100% of the cost of a vehicle – new or used – within the first year. The 100% amount will remain in effect until January 1, 2023, and then will reduce by 20% every year thereafter
- New changes to Section 179 increased the deduction amount to $1 million from $510,000
- New limitations on the amount of interest companies can deduct are in place. From 2018 – 2021 companies can deduct 30% of EBITDA. From 2022 to companies are limited to 30% of EBIT
- Companies may no longer use like-kind exchange programs for vehicles
Why is Leasing More Attractive Than Owning?
Along with being the most flexible leasing and maintenance option in the industry, the benefits of Ryder ChoiceLease are compounded by the new tax reforms. Through leveraging our procurement power for vehicles and parts, along with built-in maintenance, liability and physical damage protection, fuel, preferred rental rates, and other ancillary services, you can lease an efficient fleet with greater than 95% uptime at a lower cost.
While the new tax laws can be confusing, Ryder experts can help clarify which option – leasing or owning – is better for your business by analyzing your total cost of ownership (TCO), explaining the facts of the new tax laws, and providing you with the pros and cons so you can make the best decision for your fleet and business.