Bonus Depreciation Calculator
Calculate first-year bonus depreciation deductions under the TCJA phase-down schedule, combined with MACRS recovery for eligible asset purchases.
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 |
|---|---|---|
| $5,000,000.00 | $3,400,000.00 | $816,000.00 |
| $17,500,000.00 | $11,900,000.00 | $2,856,000.00 |
| $32,500,000.00 | $22,100,000.00 | $5,304,000.00 |
| $45,000,000.00 | $30,600,000.00 | $7,344,000.00 |
What each input means
- Asset Cost ($)
- 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.
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