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Bonus Depreciation Calculator

Calculate bonus depreciation and remaining basis, plus straight-line deduction on the remainder.

Results

Bonus deduction
$30,000
Remaining basis
$20,000
Straight-line on remainder (per year)
$4,000

Overview

Bonus depreciation allows eligible businesses to expense a large portion of an asset’s cost in the year it’s placed in service, instead of recovering that cost slowly through regular depreciation. As bonus rates phase down over time, it’s useful to see how much of an asset you can write off up front and what remains to be depreciated normally.

This bonus depreciation calculator takes an asset cost, a bonus rate for the current tax year, and a recovery period in years. It calculates your bonus deduction, the remaining basis after bonus, and a simplified straight-line deduction on the remainder so you can get a high-level view of timing and magnitude of deductions.

Use it for planning purchases, comparing “buy now vs later” scenarios, and having more informed conversations with your tax advisor about equipment and improvement timing. It’s also useful for sanity‑checking how a lower bonus rate shifts more of the deduction into future years and changes cash‑tax timing.

How to use this calculator

  1. Enter the asset’s total cost in the Asset cost field (including purchase price and any capitalizable acquisition costs).
  2. Enter the bonus depreciation rate (%) for the current tax year, based on IRS guidance (for example, 60% or 80% depending on phase-down rules).
  3. Enter the asset’s recovery period in years under MACRS (for example, 5-year or 7-year property).
  4. Review the bonus deduction and remaining basis to see how much of the asset is expensed immediately versus depreciated over time.
  5. Review the simplified straight-line annual deduction on the remainder as a rough planning figure for future years.
  6. Adjust cost, bonus rate, or recovery period to test different asset types, years, or purchase timing scenarios.

Inputs explained

Asset cost
The total cost of the depreciable asset placed in service, including purchase price and any capitalized installation or acquisition costs.
Bonus depreciation rate (%)
The bonus depreciation percentage for the placed-in-service year. Bonus rates have been phasing down over time; use the correct rate for your tax year.
Recovery period (years)
The MACRS recovery period for the asset class (for example, 5, 7, 15 years). The calculator uses this to approximate a straight-line deduction on the remaining basis.

Outputs explained

Bonus deduction
The first-year deduction allowed under bonus depreciation, calculated as asset cost multiplied by the bonus rate.
Remaining basis
The asset’s tax basis that remains after bonus depreciation. This portion is recovered over the asset’s recovery period using regular depreciation methods.
Straight-line on remainder (per year)
A simplified annual depreciation amount for the remaining basis, calculated using straight-line over the recovery period (not actual MACRS).

How it works

You enter the total cost of the eligible asset and the bonus depreciation rate applicable for the year you place it in service (for example, 60% in some phase-down years).

The calculator multiplies the cost by the bonus rate (as a decimal) to compute the bonus depreciation deduction for the placed-in-service year.

The remaining basis is the part of the asset’s cost that is not written off by bonus: Remaining basis = Cost − Bonus deduction.

For a simple planning view, the tool divides the remaining basis by the recovery period (in years) to estimate a straight-line annual deduction on the remainder.

Real-world MACRS schedules are more complex, and Section 179 may also apply, but this straight-line view gives a quick sense of how much depreciation remains after bonus.

This tool assumes 100% business use and does not adjust for partial business use or mixed-use assets; apply that adjustment before entering your cost if needed.

Formula

Bonus = Cost × Bonus rate
Remaining basis = Cost − Bonus
Straight-line remainder = Remaining basis ÷ Recovery years

When to use it

  • Estimating the first-year deduction from bonus depreciation when reviewing equipment or improvement purchases.
  • Planning the tax impact of placing an asset in service before or after a year-end bonus phase-down.
  • Comparing scenarios with and without bonus depreciation to understand cash flow and taxable income impacts.
  • Helping business owners visualize how much of an asset’s cost is recovered immediately versus over future years.
  • Providing quick numbers to bring to a tax planning meeting with your CPA or advisor, especially when comparing asset timing choices.
  • Estimating how much of a large capital purchase can be expensed immediately to manage year‑end taxable income.
  • Evaluating whether to accelerate or delay capital purchases based on changing bonus depreciation rates.
  • Explaining to stakeholders how the bonus deduction shifts taxable income into the current year versus future years.
  • Estimating tax planning impacts when buying multiple assets with different recovery periods.

Tips & cautions

  • Bonus depreciation rates can change by tax year; verify the current rate for the placed-in-service year using IRS guidance.
  • Treat the straight-line remainder as a planning shortcut—actual MACRS depreciation typically accelerates deductions into earlier years.
  • Consider Section 179 expensing separately; in practice, you may combine Section 179 and bonus depreciation, subject to limits and ordering rules.
  • Coordinate asset purchases with your broader tax situation; overly aggressive expensing in one year may reduce flexibility in future years.
  • Work closely with your tax professional to classify assets correctly and apply the right recovery periods and conventions.
  • If you have multiple assets, calculate each separately and sum results rather than averaging one blended recovery period.
  • Include installation or freight costs in basis if they must be capitalized; otherwise bonus depreciation will be understated.
  • Track placed-in-service dates carefully; missing a year-end deadline can change the bonus rate you’re eligible for.
  • If your business use is less than 100%, apply the business-use percentage before running the calculation.
  • If your company has a loss in the current year, consider whether accelerating deductions actually provides cash benefit now or just increases NOL carryforwards.
  • Document your assumptions (bonus rate, recovery period, business-use %) so you can reconcile estimates with your tax return later.
  • Simplified: uses straight-line depreciation on the remaining basis, not true MACRS tables or the various conventions (half-year, mid-quarter, etc.).
  • Does not model Section 179 expensing, business-use percentage limitations, or asset-specific bonus eligibility rules.
  • Ignores placed-in-service date, partial-year depreciation, and mid-quarter conventions that can materially change actual deductions.
  • Does not handle asset disposals, recapture, or state-specific depreciation differences.
  • Not tax advice; real-world depreciation schedules should be prepared using IRS tables and professional guidance.

Worked examples

$50k asset, 60% bonus, 5-year recovery

  • Asset cost = $50,000; bonus rate = 60%; recovery period = 5 years.
  • Bonus deduction = 50,000 × 0.60 = $30,000.
  • Remaining basis = 50,000 − 30,000 = $20,000.
  • Straight-line remainder ≈ 20,000 ÷ 5 = $4,000 per year (simplified).

$80k asset, 80% bonus, 7-year recovery

  • Asset cost = $80,000; bonus rate = 80%; recovery period = 7 years.
  • Bonus deduction = 80,000 × 0.80 = $64,000.
  • Remaining basis = 80,000 − 64,000 = $16,000.
  • Straight-line remainder ≈ 16,000 ÷ 7 ≈ $2,286 per year (simplified).

Comparing purchase timing as bonus phases down

  • Assume a $100,000 asset with a 5-year recovery period.
  • At 80% bonus: Bonus = 100,000 × 0.80 = $80,000; remainder = $20,000; straight-line ≈ $4,000/yr.
  • At 60% bonus: Bonus = 100,000 × 0.60 = $60,000; remainder = $40,000; straight-line ≈ $8,000/yr.
  • Seeing these side by side helps illustrate how a lower bonus rate shifts deductions into future years.

Partial bonus with larger asset

  • Asset cost = $250,000; bonus rate = 40%; recovery period = 5 years.
  • Bonus deduction = 250,000 × 0.40 = $100,000.
  • Remaining basis = 150,000; straight-line remainder ≈ 150,000 ÷ 5 = $30,000 per year (simplified).

Business-use adjustment example

  • Asset cost = $40,000, but business use is 75%.
  • Adjusted cost = 40,000 × 0.75 = $30,000.
  • At 60% bonus: bonus = 30,000 × 0.60 = $18,000; remainder = $12,000.
  • Straight-line remainder ≈ 12,000 ÷ 5 = $2,400 per year (simplified).

Deep dive

Calculate bonus depreciation and remaining basis by entering asset cost, bonus rate, and recovery years to see first-year and ongoing deduction patterns.

Use this bonus depreciation calculator to estimate your initial write-off and a simple straight-line view of the remainder for tax planning conversations.

Compare different bonus rates to see how the phase-down shifts deductions from the current year into future years and affects estimated tax payments.

Use the results as a quick pre-meeting estimate before running full MACRS schedules with your CPA or tax software.

If you’re close to year-end, run both the current and next-year bonus rates to see how timing affects your first-year deduction.

Use the remaining basis figure as a reminder that bonus depreciation accelerates timing but doesn’t change total depreciation over the asset’s life, only when you receive the deduction.

If you’re buying multiple assets, run them one at a time to see which purchases benefit most from the higher bonus rate.

Pair this with a cash-flow forecast so you can see how the bonus deduction changes estimated tax payments.

Because actual MACRS schedules can front-load deductions beyond straight-line, treat this output as a high-level planning snapshot rather than a filing-ready schedule.

For businesses in growth mode, bonus depreciation can free near-term cash but increase taxable income in future years once the remaining basis is smaller.

If your business expects higher income next year, compare rates to decide whether shifting deductions forward or backward is more valuable.

Methodology & assumptions

  • Bonus deduction is calculated as Asset cost × Bonus rate.
  • Remaining basis is calculated as Asset cost − Bonus deduction.
  • Straight-line on remainder is calculated as Remaining basis ÷ Recovery years.
  • Uses user-provided bonus rates and recovery periods; does not validate asset class eligibility.
  • Does not apply MACRS conventions or half-year/mid-quarter timing adjustments.
  • Does not model Section 179 or business-use percentage limitations.
  • Outputs are rounded by the UI formatter for readability.
  • Use as a planning estimate only; actual depreciation schedules can differ materially.

Sources

FAQs

Does this follow MACRS tables?
No. It shows a straight-line view on the remainder for simplicity. Use MACRS schedules for exact deductions.
Is Section 179 included?
No. This focuses on bonus depreciation only.
What about mid-quarter conventions?
Not modeled. This is a planning snapshot.
Are limits included?
No caps modeled; enter realistic costs and recovery periods.
Is this tax advice?
No. It’s an estimate. Consult a tax professional for filing.
How do I know which assets qualify for bonus depreciation?
Eligibility depends on the type of property, when it is placed in service, and current tax law. Qualified property has historically included certain new and used business assets with specific recovery periods. Always check current IRS rules or consult a tax professional.
Do state tax rules follow federal bonus depreciation?
Not always. Some states decouple from federal bonus depreciation or require add-backs. Check your state rules before relying on the federal benefit in your planning.

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This bonus depreciation calculator provides a simplified estimate of first-year bonus deduction, remaining basis, and a straight-line view of the remainder. It does not apply actual MACRS tables, conventions, Section 179 rules, business-use limits, or state-specific variations. Bonus depreciation rules and rates change over time and can interact with other tax provisions. Always rely on up-to-date IRS guidance and a qualified tax professional when preparing depreciation schedules, planning asset purchases, or filing tax returns.