Glossary
What is Bonus Depreciation?
Bonus depreciation is a federal tax provision that allows businesses to deduct a percentage of the cost of qualifying property in the year it is placed in service, rather than spreading the deduction over many years. The allowable percentage has changed through legislation over time. Unlike Section 179, it is not limited by business taxable income. Because the rules and percentages change, confirm current treatment with a tax professional before making purchase decisions.
Example
A manufacturer buys a new machine and, with its accountant, applies bonus depreciation to deduct a large share of the cost in the first year.
Related funding
Equipment Financing: The equipment itself secures the financing.
Related terms
Questions about an offer? Your advisor will explain every term.