1. What Is Bonus Depreciation?

Bonus depreciation is a tax incentive that allows businesses to immediately deduct a large percentage of the purchase price of eligible assets. For 2024, the bonus depreciation rate is set at 60% of the asset's cost.

2. How Does The Calculator Work?

The calculator uses the 2024 bonus depreciation formula:

Where:

• \( Cost \) — Purchase price of the eligible asset ($)
• \( 60\% \) — Bonus depreciation rate for 2024

Explanation: The calculation provides the immediate tax deduction amount available for qualifying business assets purchased in 2024.

3. Importance Of Bonus Depreciation

Details: Bonus depreciation helps businesses reduce their current year tax liability, improve cash flow, and incentivize investment in new equipment and property.

4. Using The Calculator

Tips: Enter the total cost of eligible assets in dollars. The calculator will compute the 60% bonus depreciation amount available for the 2024 tax year.

5. Frequently Asked Questions (FAQ)

Q1: What types of assets qualify for bonus depreciation?
A: Most new and used tangible property with a recovery period of 20 years or less, qualified improvement property, and certain computer software.

Q2: How does bonus depreciation differ from Section 179?
A: Bonus depreciation has no income limitation and applies to new and used property, while Section 179 has dollar limits and applies mainly to new property.

Q3: Is bonus depreciation being phased out?
A: Yes, the bonus depreciation percentage is scheduled to decrease by 20% each year until it phases out completely after 2026.

Q4: Are there any states that don't allow bonus depreciation?
A: Some states have decoupled from federal bonus depreciation rules and may require add-back adjustments on state tax returns.

Q5: Can bonus depreciation create a net operating loss?
A: Yes, bonus depreciation can create or increase a net operating loss, which may be carried back or forward to other tax years.