100% Bonus Depreciation: Important Changes Coming January 1, 2023

Timing is everything with capital purchases right now

Share this blog!

Subscribe

Sign up for our eNewsletter, Good Sense, to get updates on financial, strategic and operational best practices for financial institutions.

Subscribe

Get the latest information on legislation, tax reform, business guidance and on farm optimization strategies from your Pinion Ag Experts.

Subscribe

Get the latest information on legislation, tax reform, business guidance and biofuel manufacturing optimization strategies from your Pinion Biofuels Experts.

Reading Time: < 1 minutes

As we head into tax planning season, you need to be aware of important changes coming to bonus depreciation coming January 1, 2023. The Tax Cuts and Jobs Act (TCJA) has allowed banks to take 100% bonus depreciation on qualified property both acquired and placed in service after September 27, 2017 and before January 1, 2023.

However, current law will eliminate 100% bonus depreciation after the first of the year. It is currently scheduled to phase down by 20% each year for property placed in service after December 31, 2022 and before January 1, 2027.

Bonus depreciation rates will decrease by 20% each year until it is entirely phased out:

               2022: 100%

               2023: 80%

               2024: 60%

               2025: 40%

               2026: 20%

               2027 and beyond:  None.

If capital purchases are under consideration, be sure to understand the effect of bonus depreciation and the timing of your purchase. Consider accelerating the purchase and putting it into service a year or two early if you could benefit from higher depreciation rate savings. Keep this in mind as you consult with your tax advisor for year-end planning.

Contact a Pinion tax advisor with questions on how this may impact your goals and strategies.

Pinion People Related to this Post