Calculate first-year bonus depreciation from asset cost and tax year or custom rate, showing remaining basis for MACRS depreciation.
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Bonus Depreciation Formula
The calculator uses the asset cost and the bonus depreciation rate to estimate the first-year bonus depreciation deduction. It also shows the remaining basis that may be recovered through regular MACRS depreciation.
- Bonus Depreciation is the amount deductible in the first year under the bonus depreciation rate.
- Asset Cost is the depreciable cost of the qualified property.
- Bonus Rate is the applicable federal bonus depreciation percentage for the year, or the custom rate you enter.
- Remaining Basis is the portion of the asset cost left after bonus depreciation. This amount may be depreciated under regular MACRS rules.
By Tax Year: The calculator selects the federal bonus depreciation rate based on the year the asset was placed in service, then multiplies that rate by the asset cost.
Custom Rate: The calculator uses the percentage you enter instead of a preset tax-year rate. This is useful for testing scenarios or handling cases where a different rate applies.
Federal Bonus Depreciation Rates by Year
The table below shows the rates used in the tax-year mode of the calculator.
| Tax year placed in service | Bonus depreciation rate | Result for a qualified asset |
|---|---|---|
| 2022 | 100% | Full cost may be deductible as bonus depreciation. |
| 2023 | 80% | 80% bonus deduction, 20% remaining basis. |
| 2024 | 60% | 60% bonus deduction, 40% remaining basis. |
| 2025 | 40% | 40% bonus deduction, 60% remaining basis. |
| 2026 | 20% | 20% bonus deduction, 80% remaining basis. |
| 2027 and later | 0% | No bonus depreciation under the scheduled phaseout. |
Bonus Depreciation Examples
Example 1: Asset placed in service in 2024
You buy qualified equipment for $50,000 and place it in service in 2024. The 2024 bonus depreciation rate is 60%.
The bonus depreciation deduction is $30,000. The remaining basis is:
The remaining basis is $20,000.
Example 2: Custom bonus rate
You enter an asset cost of $75,000 and a custom bonus depreciation rate of 40%.
The bonus depreciation deduction is $30,000, and the remaining basis is $45,000.
Bonus Depreciation FAQ
What does “placed in service” mean for bonus depreciation?
Placed in service generally means the asset is ready and available for use in your business. The purchase date alone is not always enough. For the calculator’s tax-year mode, use the year the asset was placed in service, not necessarily the year you paid for it.
Is the remaining basis lost?
No. The remaining basis is the part of the asset cost not deducted through bonus depreciation. It is typically depreciated over time under regular MACRS rules, assuming the asset qualifies for depreciation.
Does every asset qualify for bonus depreciation?
No. Bonus depreciation generally applies to qualified business property with a recovery period of 20 years or less, along with certain other qualifying property. Land, inventory, and personal-use assets generally do not qualify. Tax rules can vary by asset type and situation, so confirm eligibility before relying on the result for a return.
