Bonus depreciation has been reduced to 80%
- Yes, there has been a change in the tax law regarding the bonus depreciation percentage.
- Previously, the bonus depreciation percentage was 100%, allowing businesses to deduct 100% of the cost of qualified assets placed in service that year.
- The reduction to 80% means that now businesses can only deduct 80% of the cost of qualified assets in the first year.
- This reduction in the bonus depreciation percentage will mean businesses will get a smaller tax deduction in the first year for new assets and it will be cut 20% each year thereafter until it hits zero.
In summary, the reduction in bonus depreciation percentage to 80% means businesses will now get a smaller tax break on new asset costs compared to before, spreading deductions over more years.
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Evan Polaski
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Evan Polaski#5 Multi-Family and Apartment Investing Contributor
#5 Multi-Family and Apartment Investing Contributor
- Cincinnati, OH
The upside is you will have larger right offs in later years, since that remaining 20% doesn't just go away and never being able to be written off, it just pushed into "year 2" or later.