Bonus Depreciation is Scheduled for Phase Out

Nov. 23, 2022

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100% Bonus depreciation will be phased out in steps for property placed in service in calendar years 2023 through 2027. Thus, an 80% rate will apply to property placed in service in 2023, 60% in 2024, 40% in 2025, and 20% in 2026, and a 0% rate will apply in 2027 and later years. Bonus depreciation is available for new and most used property, including certain building improvements.

To take advantage of the final year of 100% bonus depreciation,

we recommend that you evaluate your upcoming equipment needs prior to

December 31, 2022.

Keep in mind that the equipment must be placed in service by December 31, 2022 in order to qualify.

"Section 179 expensing" is still available subject to certain dollar limits. Although there is a slightly different set of criteria, we anticipate that “section 179 expensing” will begin to be utilized more with the reduction in bonus depreciation.

Bonus depreciation is a complicated area with tax implications for transactions other than simple asset acquisitions. Call us to discuss all aspects of bonus depreciation and any other tax matters.

Smith Miller & Buff, CPA, PA is a full service CPA firm and would be happy to assist you with your business and individual tax needs.

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