Who remembers investment tax credit?
Kooiker
Posted 9/3/2025 22:17 (#11353568 - in reply to #11353300)
Subject: RE: Who remembers investment tax credit?



Ed Boysun - 9/3/2025 19:01

I used it. If you bought a business item, you could take 10% of the purchase price off your income tax owed. Of course, that reduced the amount you could depreciate by 10% of the purchase price of the equipment. Essentially, it was bonus accelerated depreciation.




If I'm reading what you wrote correctly, you're saying a tax credit (applied to taxes due) is the same as an expense (which is what depreciation is, an expense spread over time) deducted from your gross income to determine your taxable income.      That is simply not true.


Depending on what tax bracket you're paying in, $1 of tax credit is worth 3-10x of what $1 of deduction/expense is worth.


Bonus/accelerated depreciation simply shortens the time frame for depreciating an expense.    You don't get to subtract it from your taxes due as a tax credit.



Edited by Kooiker 9/3/2025 22:22
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