Businesses have the opportunity to deduct a larger portion of the cost of certain property and equipment purchases in the year they are placed in service through bonus depreciation. For property placed in service after September 27, 2017, and before January 1, 2023, the bonus depreciation rate is 100%. This means that businesses can deduct the full cost of qualifying property in the year it is placed in service, rather than depreciating it over several years.
The bonus depreciation provision was enacted as part of the Tax Cuts and Jobs Act of 2017. The provision was intended to encourage businesses to invest in new equipment and property, thereby stimulating economic growth. The provision has been extended several times since its original enactment, and is currently scheduled to expire on December 31, 2022. However, there is a possibility that the provision could be extended again before it expires.
