Bonus Depreciation Strategy

Bonus depreciation for the 2023 tax year has been reduced to 80% of the cost of eligible property. (This is down from 100% bonus depreciation that applied in the 2022 tax year and in recent prior years.)

Congress is currently considering a bill that could retroactively change the bonus depreciation rules for the 2023 tax year. While there is no guarantee that the bill will become a law, practitioners may still wish to delay finalizing 2023 income tax returns that claim bonus depreciation, until the fate of this bill is known.

In prior years, legislation that made retroactive changes sometimes required taxpayers to amend returns that were already filed to reflect those changes. As a result, delaying the filing of 2023 returns could help to avoid this time-consuming amendment process when/if new legislation is enacted.