Bonus depreciation allows businesses to immediately deduct a large percentage of a qualifying asset's cost in Year 1. What was the bonus depreciation percentage for assets placed in service in 2023?

The 100% bonus depreciation that applied from 2017 through 2022 began phasing down under the Tax Cuts and Jobs Act. Assets placed in service in 2023 qualified for 80% bonus depreciation. The rate dropped to 60% in 2024 and is scheduled to continue stepping down by 20 percentage points each year until it reaches 0% in 2027 unless Congress acts to extend it. This phase-down makes timing of equipment or property purchases an important tax planning consideration.