Immediate depreciation benefits enable companies to deduct the full cost of new equipment, machinery, or other qualifying assets immediately, rather than depreciating them over several years.

This accelerated loss reduces taxable income in the year the purchase is made, providing a quick cash‑flow boost and a lower tax bill.

Why should you care?

Faster tax relief means more money stays in your business.

Reduced taxable income can enhance borrowing or investing capacity.

The regulations are easy for most SMBs and cover a broad array of assets.

Below you’ll find a practical guide to how immediate depreciation works, who qualifies, 節税 商品 and how to make the most of it.
Overview of Accelerated Depreciation

The U.S. tax code offers two main tools that let you deduct the entire cost of a qualifying asset in the year it’s placed in service: Section 179 and bonus depreciation (formerly known as "double‑depreciation" or "bonus").

Both encourage investment by providing a tax advantage for acquiring new equipment.

• Section 179: Permits expensing up to a defined dollar amount of qualifying property.

• Bonus depreciation: Enables you to claim 100 % of the cost of qualifying property, within phase‑out limits.

Qualifying Property: What qualifies?

• Tangible personal property: Office furniture, computers, manufacturing gear, trucks, and other physical assets.

• Certain software: Off‑the‑shelf software that isn’t a license or subscription.

• Qualified leasehold improvements: Improvements made to a leased space.

• Energy‑efficient property: Solar panels, specific wind turbines, and other renewable‑energy equipment.

Property that does not qualify includes real estate, land, or items used primarily for investment purposes.

Section 179 Rules for 2024

• Maximum deduction: $1.16 million.

• Phase‑out threshold: The deduction shrinks dollar‑for‑dollar after total purchases exceed $2.89 million.

• Business income limitation: The deduction cannot exceed taxable income from the business for the year. Any unused portion can be carried forward to future years.

• Eligible entities: Sole proprietorships, partnerships, S‑corporations, C‑corporations, and LLCs.

2024 Bonus Depreciation Rules

• Current rate: 100 % for assets placed in service post‑Dec 31 2022 and pre‑Jan 1 2026.

• Degredation rates: 80 % in 2026, 60 % in 2027, 40 % in 2028, 20 % in 2029, and 0 % after.

• No income cap: Bonus depreciation can exceed taxable income; excess rolls forward as a non‑business loss.

• Applicable to any depreciable property, even those ineligible for Section 179 (e.g., large commercial gear).

Placement in Service and Timing

• The asset must be in service during the tax year.

• The service date dictates the deduction’s tax year; purchase date is irrelevant.

• Mid‑year purchases still qualify for the full deduction, provided you record the start‑use date precisely.

Deduction Filing

• File Form 4562, Depreciation and Amortization, with your tax return.

• Enter Section 179 expense on Part I.

• On Part II, specify the bonus depreciation amount.

• Attach a brief statement describing the assets, their cost, and the date placed in service.

Illustrative Example

Imagine a small manufacturing firm that buys a new CNC machine for $350,000 in March 2024.

• Section 179: The firm can expense the full $350,000 immediately, assuming it has less than $2.89 million in total purchases.

• Bonus depreciation: If the firm opts for bonus depreciation instead, it can also claim the full $350,000.

• If the firm’s taxable income for 2024 is $200,000, Section 179 would reduce it to zero, while bonus depreciation would create a $150,000 loss that can be carried forward.

Using Both Section 179 and Bonus Depreciation

• A firm may claim both Section 179 and bonus depreciation on one property, but the combined deduction cannot exceed the asset’s cost.

• Often, companies exhaust Section 179 first, followed by bonus depreciation on remaining costs.

Key Strategic Factors

• Cash flow: Immediate depreciation lowers taxes owed, freeing cash.

• Future tax planning: Accelerating deductions now can raise future taxable income when lower depreciation benefits outweigh immediate savings.

• Income Limitation: If your business has minimal taxable income, Section 179 may be less useful because you cannot fully utilize the deduction.

• Unclaimed Section 179 can be carried forward forever, but bonus depreciation carries forward only as non‑business loss.

Frequently Asked Questions

• "I can’t take both Section 179 and bonus depreciation." – You can, but the total deduction cannot exceed the asset’s cost.

• "Depreciation only applies to physical assets." – Software and certain energy‑efficient property also qualify.

• "If I take a deduction now, I’ll lose it later." – Depreciation is a tax benefit, not a cash outlay.

Important Reminders

• Keep detailed invoices, purchase orders, and service dates.

• Update your records annually to reflect any changes in limits or phase‑out thresholds.

• Consider consulting a tax professional to determine the optimal mix of Section 179 and bonus depreciation for your specific situation.

Final Thoughts

Immediate depreciation benefits give businesses a powerful lever to reduce taxable income and improve cash flow.

Knowing Section 179 and bonus depreciation rules helps you time purchases, maximize deductions, and retain more cash.

Whether you’re a sole proprietor outfitting a new office or a mid‑size company investing in production equipment, the ability to write off entire assets in the year they’re placed in service can make a significant difference to your bottom line.