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  • Denise Hue

Bonus Depreciation - 2019 Update

Bonus depreciation is an additional first-year depreciation allowance equal to a set percentage of the adjusted basis of eligible property. The percentage for bonus depreciation for 2019 is 100%. Bonus depreciation is fully deductible for alternative minimum tax purposes; no adjustment is required.

As a practical matter, for property placed in service in 2019 that is eligible for bonus depreciation and used 100% for business, there is no need to elect first-year expensing; the entire cost can be written off using bonus depreciation.

Under prior law, you had to be the original user of the property; but this rule no longer applies for property acquired after and placed in service after September 27, 2017.

Bonus depreciation can be claimed for any property with a recovery period of 20 years or less, computer software that is not a Section 197 intangible (see the Filing Tip in 42.16), and buildings that replace or rehabilitate property damaged, destroyed, or condemned as a result of a federally declared disaster. Eligible property also includes the costs of television, film, and theatrical production and the cost of certain plants that are planted and grafted.

For a vehicle placed in service in 2019 and used over 50% for business, the first-year depreciation limit using bonus depreciation is $18,100.

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