SYSOPERATIONALRETURNS / YEAR9,500+REFUNDS DELIVERED$8M+STRATEGIES DEPLOYED400+RETURNS TRAINED GENIE10,000+UPTIME 90D99.998%IRS ACK< 90sSOC 2 TYPE IIATTORNEY-CLIENT PRIVILEGESYSOPERATIONALRETURNS / YEAR9,500+REFUNDS DELIVERED$8M+STRATEGIES DEPLOYED400+RETURNS TRAINED GENIE10,000+UPTIME 90D99.998%IRS ACK< 90sSOC 2 TYPE IIATTORNEY-CLIENT PRIVILEGE
← Learn
TAX STRATEGY

Bonus Depreciation: Instant Business Deductions

How IRC §168(k) lets businesses front-load up to 60% of eligible asset costs as a first-year deduction instead of spreading them over years.

Real Estate◷ 6 min readApril 2026intermediateTaxosAgent Editorial Team
Savings Potential
$5,000–$50,000 per year
Results vary by situation
Eligible:LLCS-CorpC-CorpSole Prop

The government is subsidizing your growth.

Bonus Depreciation (IRC §168(k)) allows businesses to immediately deduct a large percentage of the purchase price of eligible assets, rather than spreading the deduction over several years. While the 100% rate is currently phasing down (60% in 2024, 40% in 2025), it remains a massive engine for cash flow.

By front-loading your deductions, you lower your current tax bill, keeping more cash in the business to fund expansion or hire new employees.

The $100,000 Equipment Example

Example — IRC §168(k)

Scenario: You buy $100,000 of servers or machinery in 2024.

  • Standard 5-Year Depreciation: $20,000/year
  • Bonus Depreciation (60%): $60,000
  • Remaining Basis (40%): $40,000 (standard depreciation applies)
  • Total First-Year Deduction: $68,000
  • Tax Wealth Reclaimed (at 37% bracket): $25,160

Instead of waiting 5 years to get the full deduction, you get 68% of it in year one.

What Qualifies?

Eligible property must have a recovery period of 20 years or less:

  • Personal Property: Computers, software, furniture, and machinery.
  • Heavy Vehicles: SUVs and trucks with GVWR over 6,000 lbs.
  • Qualified Improvement Property: Interior renovations to non-residential buildings.

Implementation Steps

  1. Verify Eligibility: Ensure the asset is new or "new to you" and used more than 50% for business.
  2. Place in Service: You must start using the asset for business by December 31.
  3. Elect Out (Optional): Sometimes it is better to save deductions for future high-income years. You can "elect out" of bonus depreciation by asset class.
  4. File Form 4562: Report the depreciation on your business return.

Audit Protection

Critical Compliance

"Recapture" is the danger here. If you take bonus depreciation and then sell the asset for a profit, the IRS will "recapture" that deduction as ordinary income tax. Plan your exit strategy before taking massive depreciation, and consult a licensed professional to model the long-term tax impact.

Related Strategies
Apply this strategy

See how this applies to your situation.

Consult a licensed professional before implementing any tax strategy. Individual results vary.

Ask Genie →