What Is Bonus Depreciation?

Bonus depreciation allows businesses to deduct a large percentage of the cost of qualifying assets in the year they're placed in service. It was 100% through 2022, but it's been phasing down — 60% in 2024, 40% in 2025, and 20% in 2026. Unlike Section 179, bonus depreciation can create or increase a business loss. It applies to new and used property. Congress may extend or modify these rules, so check current law before making large purchases.