10/04/2022

Make the Most of Bonus Depreciation and Cost Segregation Under the TCJA

Act now to avoid risking your chances

With the Tax Cuts and Job Act (TCJA) of 2017, asset additions can qualify for 100 percent bonus depreciation in the year they are placed in service. This applies for new and used assets placed in service after September 27, 2017, and before January 1, 2023. Beginning in 2023, bonus depreciation phases out at 20% per year over the next five calendar years until 2027, unless Congress acts to extend it.

See percentage decreases:

• 2023 – the deduction is 80 percent
• 2024 – the deduction is 60 percent
• 2025 – the deduction is 40 percent
• 2026 – the deduction is 20 percent
• 2027 and future years (unless changed by Congress) – the deduction will be 0 percent

Bonus Depreciation in a Nutshell

Bonus depreciation has been available in varying amounts for some time. Immediately prior to the passage of the TCJA, for example, taxpayers generally could claim a depreciation deduction for 50% of the purchase price of qualified property in the first year, as opposed to deducting smaller amounts over the useful life of the property under the modified accelerated cost recovery system (MACRS).

Please select this link to read the complete article from OSAP Strategic Partner Clark Schaefer Hackett (CSH).