It is important to be aware of the benefits of bonus depreciation in order to accelerate your depreciation deductions. Bonus depreciation allows an immediate deduction of the cost of equipment, machinery, qualified improvement property and even horses.
This deduction is generally available for new property. However, there are instances where a taxpayer can qualify for bonus depreciation if the property was not previously used by the taxpayer. In other words, the use of the property has to be new with that taxpayer, even if the property itself is used property.
Starting in 2023, bonus depreciation will start to be phased out by 20% each year until 2027, so you should consider making fixed asset purchases in 2022.
Bonus depreciation can be quite complex as there are many rules. Therefore, you should reach out to one of our professionals for further discussion and find out how you may take advantage of it.