Bonus Depreciation

Definition

Bonus depreciation is a tax incentive that allows businesses to immediately deduct a large percentage of the cost of eligible property in the year it is placed in service, rather than depreciating it over its normal useful life. It applies to qualifying assets such as equipment, machinery, and certain building components identified through a cost segregation study. The available bonus depreciation percentage has varied over time based on tax legislation, making timing an important planning consideration.