Bonus Depreciation Calculator
Bonus depreciation lets a business deduct a large percentage of a qualifying asset's cost in the first year under Internal Revenue Code Section 168(k), with the rest depreciated normally over the recovery period. Because the bonus percentage changes by year of acquisition under the Tax Cuts and Jobs Act phase-down and later law, this calculator takes the percentage as an editable input from the current IRS Form 4562 instructions. Enter the cost basis, any Section 179 expensing taken first, and the bonus percentage to see your first-year bonus deduction and remaining basis.
Bonus depreciation formula
Basis after 179 = cost basis - Section 179 expensed Bonus deduction = basis after 179 x bonus rate% Remaining basis = basis after 179 - bonus deduction
The remaining basis is depreciated over the asset's recovery period under MACRS. Use Form 4562 to report both.
Worked example
Cost 100,000, no Section 179, bonus rate 60%. Bonus deduction = 100,000 x 0.60 = 60,000. Remaining basis = 40,000.00 to depreciate under MACRS.
Bonus depreciation: frequently asked questions
What is bonus depreciation?
Bonus depreciation, under Internal Revenue Code Section 168(k), lets a business deduct a large percentage of the cost of qualifying property in the year it is placed in service, rather than spreading the deduction over the asset's useful life. It applies to most new and used tangible property with a recovery period of 20 years or less.
Why is the bonus percentage an editable input?
The bonus depreciation percentage changes over time. The Tax Cuts and Jobs Act set it at 100% and then scheduled it to phase down in steps. Because the applicable percentage depends on the year the property is placed in service and on later legislation, this calculator takes the percentage as an editable input. Confirm the current rate in the IRS instructions for Form 4562.
How does bonus depreciation interact with regular depreciation?
Bonus depreciation is taken first on the full cost basis. The remaining basis (cost minus the bonus deduction) is then depreciated under the normal Modified Accelerated Cost Recovery System (MACRS) over the asset's recovery period. This calculator shows the first-year bonus deduction and the remaining basis to be depreciated.
How is bonus depreciation different from Section 179?
Section 179 lets you expense an asset up to an annual dollar limit and is reduced for high total purchases, while bonus depreciation has no dollar cap and applies a percentage. Many businesses use Section 179 first up to its limit, then bonus depreciation on the rest. They are reported together on Form 4562.
Official sources
- Internal Revenue Service: About Form 4562, Depreciation and Amortization.
- Internal Revenue Service: Publication 946, How To Depreciate Property.
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.