What is Bonus Depreciation?
Definition Bonus depreciation is an additional first-year deduction for a percentage of the cost of qualifying assets placed in service during the year. Unlike Section 179, it has no annual dollar cap and can create or increase a loss. The allowable percentage is set by law and has changed in recent years, so the current-year rate should always be confirmed.
Combined with Section 179, it gives businesses flexible ways to front-load deductions, but the shifting percentage makes year-of-purchase planning important.