In an economy where uncertainty often leads to hesitation, savvy buyers know that timing is everything—especially when it comes to investing in a boat for business use. With recent updates to the Section 179 deduction and 100% bonus depreciation laws, purchasing the right vessel before year-end could offer substantial tax savings—and put more cash back in your pocket.
What Is Bonus Depreciation?
Bonus depreciation is a tax incentive that allows businesses to deduct the full cost of qualifying equipment—like certain boats or yachts—in the year they’re placed in service. Traditionally, you’d have to spread that deduction over 5, 7, or more years. But with 100% bonus depreciation, that write-off happens all at once.
Here’s a quick example:
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- Let’s say you purchase a $500,000 boat for charter or business entertainment.
- Under normal depreciation: You might deduct roughly $71,000 per year over seven years.
- Under 100% bonus depreciation: You can deduct the entire $500,000 this year.
That means lower taxable income now, lower tax liability, and more liquidity when it matters most.
What Kind of Boats Qualify?
To take advantage of these incentives, the boat must meet a few requirements:
1. Business Use Over 50%
The boat must be used primarily for business purposes.
Examples include:
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- Charter fishing vessels
- Tour boats
- Offshore workboats or inspection vessels
- Yachts used for client entertainment or charter
2. In-Service Timing
The vessel must be purchased and placed in service after January 19, 2025 to qualify for the new 100% deduction under updated rules. That means now is the time to start planning your acquisition.
3. 20-Year Useful Life or Less
Most boats qualify under MACRS depreciation rules, meeting this condition with ease.
Why Act Now?
Waiting for the economy to “stabilize” could mean missing out on some amazing buying opportunities while the market is a little soft. Don’t wait until end of the year to act on one of the most powerful tax breaks available to marine business buyers. Whether you’re looking to expand your charter fleet, offset operational costs, or use a luxury yacht as a client-entertainment asset, purchasing before the end-of-year deadline could result in tens or even hundreds of thousands of dollars in savings.
Thinking About Getting into Charter?
A standout yacht like the 115’ Mengi Yay M/Y PANACEA could be a perfect fit. With its size, amenities, 5 stateroom layout and MASSIVE flybridge, it’s charter-ready!!—and more importantly, could be eligible for the business-use deduction under the current tax law.
The Section 179 and bonus depreciation rules are more than just numbers on a page—they’re a strategic tool for those ready to turn a boat purchase into a business investment. If you’ve been eyeing a yacht or considering a commercial vessel, this might be your best opportunity to act—not just from a tax standpoint, but from a long-term financial one as well. That said, this is decision that should involve the advice and direction from your CPA and attorney in conjunction with your yacht broker to properly structure the purchase to your own needs.
Need help navigating your options?
We’re happy to walk you through vessels that align with business use requirements and help you make the most of your purchase.