How Could 2012 Tax Changes Effect USA Car Hire?

Hi all,

Not a subject I generally talk about but tax alterations in the USA due to hit may have an effect on your car rental in 2012.

Why? I hear you all cry… well get comfy and I’ll attempt to tell you.

In September 2010 the U.S. government introduced something called bonus depreciation.

Bonus depreciation, was one of the U.S. governments idea’s on ways to kick start the economy, for car rental firms it meant that companies could write off the entire cost of a new car in the tax year it was purchased. The advantage of this resulted in that USA car hire suppliers have been paying little to no tax during that time.

However in 2012 the bonus depreciation decreases to 50% and in 2013 0%. Which means that car rental companies who have not planned ahead could possibly see a cash flow issue on the horizon due to surprising tax bills and also will get a double whammy of taxes, firstly when they purchase the vehicle and secondly when they sell it on.

What does this mean?

In my opinion this could mean one of two things. Firstly car rental companies could increase basic costs of car hire, especially for pay upon arrival car rental, to make up for the additional tax implications.

Secondly, could we see suppliers holding on to the vehicles for slightly longer than the average 6 month period, getting extra revenue from the car to help with cash flow and the additional taxation?

The advantage of booking with usrentacar.co.uk is that you prepay your hire costs, and once booked and confirmed these prices will never increase. Those hiring or upgrading locally might be in for a nasty surprise in 2012.

Kind regards,

James

 car hire USA

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