Bonus Depreciation & Section 179

Accelerated depreciation methods allow businesses to recover the cost of qualifying assets more quickly than traditional straight-line depreciation.

Section 179 Expensing

Section 179 of the Internal Revenue Code allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. Key considerations include:

• Annual deduction limits that are adjusted for inflation

• Phase-out thresholds based on total equipment purchases

• Restrictions on certain property types including real property improvements

• Business income limitations that may defer unused deductions

Bonus Depreciation

Bonus depreciation, currently available under IRC Section 168(k), allows for immediate expensing of a percentage of qualifying property costs. The percentage has been phasing down from 100% and will continue to decrease in future years.

Strategic Considerations

High-income earners should evaluate whether accelerated depreciation aligns with their broader tax planning goals, considering factors such as current versus future tax rates, passive activity rules, and at-risk limitations.

Tax outcomes depend on facts and circumstances. This content is for educational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.