Section 168(k)

Definition

Section 168(k) of the Internal Revenue Code is the statutory provision that authorizes bonus depreciation, allowing businesses to immediately expense a percentage of the cost of qualified property in the year it is placed in service. The allowable percentage has been phasing down under the Tax Cuts and Jobs Act schedule, from 100 percent after 2022 to 60 percent in 2024 and 40 percent in 2026. CPAs use this provision to accelerate deductions and reduce a client's current-year taxable income beyond what standard MACRS depreciation would allow.