The formulas
- Bonus = cost x bonus %
- First-year MACRS = (cost - bonus) x first-year rate for the class and convention
How it works
Tax year: 2025 and 2026 acquisitions (Public Law 119-21).
Public Law 119-21 reinstated the 100 percent special depreciation allowance for qualified property acquired and placed in service after January 19, 2025. A taxpayer can elect a 40 percent allowance instead for the first tax year ending after January 19, 2025. Bonus is taken first, and the remaining basis is depreciated under MACRS with the first-year rate for the class and convention.
Enter the percentage that applies. Recovery rates come from the MACRS tool formula, which matches the Publication 946 tables.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
What bonus rate applies to property acquired after January 19, 2025?
100 percent, unless you elect the 40 percent allowance for the first tax year ending after that date.
Is bonus depreciation limited by income?
No. Unlike section 179, it can create or increase a loss.
Does bonus apply to used property?
Yes, if the taxpayer did not use it before acquiring it and bought it from an unrelated party. Property acquired after January 19, 2025 qualifies for the 100 percent rate on those terms.
Sources
- IRS Publication 946, How To Depreciate Property
- IRS summary of One, Big, Beautiful Bill provisions, with guidance on the additional first year depreciation deduction
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