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HOME › GLOSSARY › BONUS DEPRECIATION · VOLUME I · 2026 EDITION
GLOSSARY ENTRY · DEFINED TERM

Bonus Depreciation

First-year additional depreciation under IRC §168(k). Allows a percentage of the adjusted basis of qualifying property to be deducted in the year of placement. Currently 100% under OBBBA for property placed in service after January 19, 2025.

STATUTE BASIS · IRC §168(k)

In context

Bonus depreciation under §168(k) is layered on top of MACRS — the taxpayer takes the §168(k) deduction first, then depreciates any remaining basis under MACRS over the recovery period. Eligibility requires the property to have a MACRS recovery period of 20 years or less, excluding 27.5-year residential rental and 39-year nonresidential real property from direct eligibility.

The rate history:

  • 2018–2022: 100%
  • 2023: 80%; 2024: 60%; 2025 (pre-OBBBA): 40%
  • After January 19, 2025: 100% permanent under OBBBA §70302

See /bonus-depreciation/ for the topic hub.