Qualified improvement property (generally, interior improvements to nonresidential property, excluding elevators, escalators, interior structural framework and building expansion) also qualify for bonus depreciation. Acquired as part of a tax-free transaction.Used by the taxpayer or a predecessor before acquiring it,.Used property generally qualifies if it wasn’t: That includes computer systems, software, certain vehicles, machinery, equipment and office furniture.īoth new and used property can qualify. Special rules apply to property with longer recovery periods.īusinesses can take advantage of the deduction by purchasing, among other things, property with a useful life of 20 years or less. The TCJA expanded the deduction to 100% in the year qualified property is placed in service through 2022, with the amount dropping each subsequent year by 20%, until bonus depreciation sunsets in 2027, unless Congress acts to extend it. Immediately prior to the passage of the TCJA, for example, taxpayers generally could claim a depreciation deduction for 50% of the purchase price of qualified property in the first year - as opposed to deducting smaller amounts over the useful life of the property under the modified accelerated cost recovery system (MACRS). Bonus Depreciation in a Nutshellīonus depreciation has been available in varying amounts for some time.
The amount of first-year depreciation available as a so-called bonus will begin to drop from 100% after 2022, and businesses should plan accordingly. The Tax Cuts and Jobs Act (TCJA) significantly boosted the potential value of bonus depreciation for taxpayers - but only for a limited duration. Georgia State & Local Tax (SALT) Alerts.Corporate Accounting | Accounting Support.Forensic Accounting & Insurance Claims Services.Litigation Support & High-Net-Worth Divorce Services.Individual Tax Consulting And Compliance.Corporate Tax Consulting & Compliance | Credits & Incentives.
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