Can I Use Bonus Depreciation to Reduce My Taxes?

Yes — bonus depreciation allows you to immediately deduct a large percentage of qualifying new and used business property in the year it's placed in service. Under the TCJA, bonus depreciation was 100% through 2022, but it's been phasing down: 80% for 2023, 60% for 2024, 40% for 2025, and 20% for 2026, before expiring. Unlike Section 179, bonus depreciation can create a business loss, which can offset other income. It applies to property with a recovery period of 20 years or less, including equipment, computers, and certain qualified improvement property. Congress may extend or modify these rules, so check current law when planning large purchases.