Bonus Depreciation Calculator
Calculate first-year bonus depreciation deductions under the TCJA phase-down schedule, combined with MACRS recovery for eligible asset purchases.
About this calculator
This calculator splits an asset's first-year deduction into two pieces: bonus depreciation, taken as a flat percentage of the full asset cost, and standard MACRS depreciation on whatever cost remains after bonus. Tax Year Placed in Service dominates every dollar output here because it selects the bonus rate from the TCJA phase-down schedule -- 100% in 2022, then stepping down 20 percentage points a year to 80% (2023), 60% (2024), 40% (2025), 20% (2026), and 0% by 2027 -- and that percentage applies to the entire Asset Cost, so moving between tax years swings the deduction far more than a moderate change in asset cost does. Asset Cost still moves every output in a straightforward 1:1 line once the tax year (and therefore the bonus rate) is fixed.
New or Used Asset has no effect on any figure in this calculator at all -- the code applies the identical bonus rate regardless of that selection, consistent with its own helper text noting that after TCJA both new and used assets generally qualify for bonus depreciation. MACRS Recovery Period changes the first-year MACRS rate table (33.33% for 3-year property down to 2.564% for 39-year property) but its effect on the combined first-year deduction shrinks as the bonus percentage climbs, since a higher bonus rate leaves less remaining basis for MACRS to apply to -- at the 2027+ 0%-bonus setting, recovery period becomes the dominant factor instead of tax year. This model doesn't apply Section 179 first (see the separate Section 179 calculator for that layered calculation), nor does it model listed-property limits on vehicles.
Tax Disclaimer
This calculator provides estimates based on general tax rules and may not reflect your specific situation. Tax laws vary by jurisdiction and change frequently. Consult a qualified tax professional or CPA for advice tailored to your circumstances.
Inputs
Results
Total First-Year Deduction
$68,000.00
≈ 6 years of state college
First-Year Tax Savings
$16,320.00
≈ 8 gaming PCs
How to Use This Calculator
- Enter Asset Cost for the qualifying business asset placed in service.
- Select Tax Year — bonus depreciation is 60% in 2024, phasing down 20%/year through 2026.
- Select MACRS Recovery Period (3, 5, 7, 10, 15, or 20 years) for the asset type.
- Enter your Marginal Tax Rate % for tax savings calculation.
- Review Year 1 Deduction (bonus + MACRS) vs. Year 1 Deduction Without Bonus to quantify the acceleration.
- Bonus depreciation applies automatically unless you elect out — elect out in years with low income to preserve deductions.
How the result changes with Asset Cost ($)
| Asset Cost ($) | Total First-Year Deduction | First-Year Tax Savings |
|---|---|---|
| $50,000.00 | $34,000.00 | $8,160.00 |
| $75,000.00 | $51,000.00 | $12,240.00 |
| $150,000.00 | $102,000.00 | $24,480.00 |
| $250,000.00 | $170,000.00 | $40,800.00 |
What each input means
- Asset Cost ($)
- Total purchase price of the depreciable business asset.
- Tax Year Placed in Service
- Bonus depreciation phases down 20% per year from 2023 through 2027 under TCJA.
- MACRS Recovery Period
- IRS asset class determines MACRS recovery period. Vehicles = 5yr, furniture = 7yr, land improvements = 15yr.
- Marginal Tax Rate (%)
- Your highest federal + state marginal income tax rate.
- New or Used Asset
- After TCJA, both new and used assets qualify for bonus depreciation (with some exceptions).
What each result means
- Total First-Year Deduction
- Bonus depreciation plus MACRS first-year allowance.
- First-Year Tax Savings
- Tax reduction from the total first-year deduction at your marginal rate.
- Bonus Depreciation
- First-year bonus depreciation amount based on TCJA phase-down.
- MACRS First-Year Depreciation
- Regular MACRS depreciation on the remaining basis after bonus.
- Savings vs. No Bonus
- Additional tax savings compared to using only regular MACRS depreciation.
- Remaining Depreciable Basis
- Cost basis left to depreciate in future years under MACRS.
- First-Year Deduction %
- Total first-year deduction as a percentage of asset cost.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersAsset Cost ($) = 100000, Tax Year Placed in Service = 2024, MACRS Recovery Period = 5, Marginal Tax Rate (%) = 24 = 5 input(s) provided
- Calculate Total First-Year DeductionTotal First-Year Deduction = bonusDepreciation + macrsFirstYear68000 = $68,000
- Calculate First-Year Tax SavingsFirst-Year Tax Savings = totalFirstYearDeduction * (marginalRate / 100)16320 = $16,320
- Calculate Bonus DepreciationBonus Depreciation = assetCost * effectiveBonusRate60000 = $60,000
- Calculate MACRS First-Year DepreciationMACRS First-Year Depreciation = remainingBasis * macrsFirstYearRate8000 = $8,000
Engine last updated . Checked against 2 independently-derived tests — how we verify calculators. Built by Paul Gunder, a software engineer, not a licensed financial, medical, or legal professional.
Frequently Asked Questions
Why does Tax Year Placed in Service matter more than the asset's cost?
Tax Year selects the bonus depreciation percentage from the TCJA phase-down schedule -- 100% in 2022 down to 0% by 2027, dropping 20 percentage points each year -- and that percentage applies to your entire Asset Cost. Since the rate itself can range from 0% to 100% depending on the year, switching tax years swings Total First-Year Deduction more than a moderate change in Asset Cost does, even though Asset Cost still moves every output in a straight line once the year is fixed.
Does it matter if my asset is new or used?
No -- New or Used Asset has zero effect on any output in this calculator. The engine applies the same bonus depreciation rate to both, which lines up with the actual rule after the Tax Cuts and Jobs Act: both new and used qualifying property generally get the same bonus depreciation treatment (with some exceptions this simplified model doesn't cover, such as related-party purchases).
Why does MACRS Recovery Period matter less when bonus depreciation is high?
MACRS First-Year Depreciation only applies to the basis remaining AFTER bonus depreciation is subtracted. At a 100% or 60% bonus rate, little or no basis is left over, so Recovery Period has a small effect on the total. As the bonus percentage drops toward 0% in the later TCJA phase-down years, more basis remains for MACRS, and Recovery Period becomes a much bigger factor in the total first-year deduction.
What isn't included in this bonus depreciation estimate?
This calculator models bonus depreciation and MACRS together, but doesn't layer in a Section 179 election first, which many businesses use before applying bonus depreciation to whatever basis remains. It also doesn't apply the special listed-property depreciation caps that limit deductions for vehicles and similar mixed-use assets.
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