2020 Bonus Depreciation Percentage
The 2020 Bonus Depreciation Percentage is 100%.
Effective 2020-01-01Source: 2020 Instructions for Form 4562 (IRS)Verified 2026-08-29
Compared with 2019
Every figure on this page is unchanged from 2019.
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Special depreciation allowance | 100% | 100% | +0% (+0.0%) |
Who it applies to
Taxpayers who placed qualifying property in service during the 2020 tax year and are eligible to claim the special depreciation allowance under IRC Section 168(k).
What changed this year, and why
For 2020, the IRS applies a 100% special depreciation allowance (bonus depreciation) to most qualifying property placed in service during the tax year. The allowance is an additional first-year deduction taken after any Section 179 expense deduction and before regular MACRS depreciation.
Common questions
- What is the bonus depreciation percentage for 2020?
- For most qualifying property placed in service during 2020, the special depreciation allowance (bonus depreciation) is 100% of the depreciable basis.
Every amount on this page is a published figure rather than yours. The First-year bonus depreciation on an asset takes the number you enter and works it out against them, showing which published figure it used.
What the percentage is applied to, and what is left afterwards
The 100% special depreciation allowance is taken first against the cost of qualified property. Whatever cost is left after that allowance - the remaining cost - becomes the new depreciable basis for regular MACRS depreciation. In other words, the depreciable basis must be reduced by the special allowance before any regular MACRS deduction is calculated on the balance. For 2020, because the allowance is 100%, the entire cost of qualifying property can generally be written off in the first year, leaving zero remaining basis for MACRS in the ordinary case. If only a portion of the property qualifies (for example, because of partial business use), the allowance is applied only to the qualifying share, and the remaining share continues through the normal MACRS schedule.
Depreciating the remaining cost. After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4). Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before fig- uring your regular MACRS depreciation deduction.
Publication 946 (2020), How To Depreciate Property (IRS)
Electing out, by class of property
A taxpayer may decline the special depreciation allowance on a class-by-class basis. The election is made for an entire class of property and applies to every asset in that class placed in service during the tax year - it cannot be applied to individual items. Each owner of qualified property must make its own election, so partnerships, S corporations, and consolidated groups each elect separately. The election is made by attaching a statement to the return identifying the class of property for which the allowance is being declined. When the election is in effect, no special depreciation allowance is claimed for that class, so the full cost remains in the depreciable basis and is recovered through regular MACRS instead of through the 100% allowance.
You can elect, for any class of property, not to deduct any special depreciation allowances for all property in such class placed in service during the tax year. To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election.
Publication 946 (2020), How To Depreciate Property (IRS)
Recapture when you dispose of the property
When property for which a special depreciation allowance was claimed is later sold or otherwise disposed of, the gain is generally recaptured as ordinary income, but only up to the amount of the special depreciation allowance previously allowed or allowable. This means the portion of the gain attributable to the 100% first-year allowance is taxed as ordinary income rather than capital gain; any gain beyond that amount is then treated under the usual rules. Recapture is triggered by the disposition itself, so the timing and character of the gain depend on when and how the asset is disposed of. The recapture applies to the full allowance that was taken (or could have been taken), not to the remaining adjusted basis, so even if the property was held only briefly after the allowance year, the ordinary-income recapture can be substantial.
When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposi- tion is generally recaptured (included in income) as ordi- nary income up to the amount of the special depreciation allowance previously allowed or allowable.
Publication 946 (2020), How To Depreciate Property (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2020 Instructions for Form 4562 (IRS)
- Special depreciation allowance
is eligible for a special depreciation allowance of 100% of the depreciable basis of the property.