When a business buys long-lived assets, tax rules usually require deducting the cost over several years. Special elections can accelerate that deduction.
Standard depreciation
Under MACRS, assets are assigned a recovery period such as five years for computers and vehicles or seven for furniture. Straight-line spreads the deduction evenly, while accelerated methods front-load it.
Section 179 and bonus depreciation
Section 179 lets businesses deduct the full cost of qualifying equipment in the year it is placed in service, up to annual limits and subject to taxable income. Bonus depreciation allows an additional first-year deduction for qualifying property. Limits and percentages have changed in recent tax legislation, so verify current rules.
Practical advice
Keep invoices and in-service dates. Vehicles over a certain weight and listed property have special limitations. Faster deductions reduce tax now but leave less basis for later years and may trigger recapture on sale.
Try the numbers
Use our Depreciation Calculator to see this in practice. With its default example (Asset cost: $60,000; Salvage value: $6,000; Useful life (years): 7), it shows first-year depreciation: $7,714. Adjust the inputs to match your situation.
Key takeaways
- Assets are normally deducted over multiple years.
- Section 179 can allow immediate expensing.
- Confirm current limits with a tax professional.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.