Finance category
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Bonus Depreciation Calculator
Bonus depreciation lets you deduct a big percentage of qualifying business property cost in year one. This calculator shows the deduction, year-one total, and tax savings.
2024: 60%, 2025: 40%, phaseout
Year-one tax savings
$18,496
at 32% bracket
Bonus deduction (year 1)
$51,000
60% of cost
Year 1 total deduction
$57,800
bonus + first year regular
Annual depreciation (after year 1)
$6,800
remaining basis / life
How bonus depreciation works
Bonus depreciation lets you deduct a percentage of qualifying property cost in the first year, on top of regular depreciation. Originally 100%; phasing down 20 points per year — 60% in 2024, 40% in 2025, 20% in 2026, 0% in 2027 unless extended.
Most assets with useful life under 20 years qualify (equipment, vehicles, computers, furniture). For real estate investors, cost segregation studies break out personal property (5/7/15-year) from the building (27.5/39-year) to apply bonus to the personal property portion.
How to Use
- Enter the asset cost.
- Enter the bonus depreciation percentage for the year placed in service (60% for 2024, 40% for 2025).
- Enter the asset's useful life (5 years for vehicles/computers, 7 for furniture, 15 for land improvements).
- Enter your marginal tax rate to compute tax savings.
Frequently Asked Questions
What property qualifies for bonus depreciation?
Most tangible personal property with useful life under 20 years: equipment, vehicles (with limits for passenger autos), computers, furniture, qualified improvement property, and tenant improvements. New or used both qualify.
How does bonus depreciation interact with Section 179?
Section 179 applies first (with caps and phaseouts), then bonus depreciation applies to remaining basis. Section 179 is more flexible for picking specific assets; bonus is automatic on qualifying property unless elected out.
Can rental real estate use bonus depreciation?
Not on the building itself (27.5-year residential, 39-year commercial). But cost segregation can identify shorter-life components (5-year carpets, 15-year land improvements) that do qualify for bonus.
What's the bonus depreciation phaseout?
100% before 2023, 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, 0% in 2027 — unless Congress extends. Time large purchases to maximize bonus while it's available.
Related Calculators
Cost Segregation Calculator
Break out personal property to apply bonus depreciation on rentals.
Section 179 Deduction Calculator
First-year expensing alternative to bonus depreciation.
Depreciation Schedule Calculator
Track depreciation year by year after bonus.
Depreciation Calculator
Run standard MACRS depreciation.
Self-Employment Tax Calculator
Bonus depreciation lowers SE income and SE tax.
Tax Bracket Calculator
Find your marginal rate to size tax savings.
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