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Writer's pictureJoseph Witzig, CPA

Bonus Depreciation Decreases to 80% in 2023

Updated: Jul 8, 2023

Bonus depreciation, the business incentive that encourages investments in fixed assets such as vehicles, furniture and equipment, will be reduced this year for the first time since 2017.


Because of the Tax Cuts and Jobs Act (TCJA) in 2017, there were some important changes to the rules on how businesses expensed there assets. The largest change was the 100% bonus depreciation, which provides businesses a 100% write off of certain assets acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. Prior to the bill, bonus depreciation was just 50%.





Bonus depreciation percentages will decrease by 20 points each year for property placed in service after Dec. 31, 2022, and before Jan. 1, 2027. Here is what we can expect:

  • 2022: 100%

  • 2023: 80%

  • 2024: 60%

  • 2025: 40%

  • 2026: 20%

  • 2027: 0%

Why is bonus depreciation important?


Bonus depreciation allows businesses to take an immediate deduction in the first year on the cost of eligible business property. This will in turn lower the tax liability by reducing taxable income.

Examples of what qualifies for bonus depreciation

  • Computers

  • Furniture

  • Equipment

  • Leasehold Improvements made to the interior portion of nonresidential buildings

  • Leasehold Improvements made to the interior portion of vacation rentals

  • Vehicles

Businesses will want to act quickly on their decisions regarding fixed asset investments in order to capture the accelerated depreciation.


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