2021 Bonus Depreciation Percentage
The 2021 Bonus Depreciation Percentage is 100%.
Effective 2021-01-01Source: 2021 Instructions for Form 4562 (IRS)Verified 2026-08-29
Compared with 2020
Every figure on this page is unchanged from 2020.
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Special depreciation allowance | 100% | 100% | +0% (+0.0%) |
Who it applies to
Taxpayers who placed qualifying property in service during the 2021 tax year and wish to claim bonus depreciation under section 168(k).
What changed this year, and why
For 2021, the IRS allows a special depreciation allowance (bonus depreciation) of 100% for certain qualified property placed in service during the tax year. The allowance is an additional first-year deduction taken after any section 179 expense deduction. It is calculated by multiplying the depreciable basis of the property by the applicable percentage, which is 100% for 2021.
Common questions
- What types of property qualify for 100% bonus depreciation?
- For 2021, certain qualified property placed in service during the tax year is eligible for a 100% special depreciation allowance. Other categories of property may be eligible for a reduced percentage.
- What is the special depreciation allowance?
- Bonus depreciation is officially called the special depreciation allowance. It is an additional first-year depreciation deduction allowed under section 168(k) for certain qualified property.
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 applied to the property's depreciable basis - the cost or other basis reduced by any section 179 deduction and by the portion of basis attributable to non-business use. For 2021, the allowance equals 100% of that depreciable basis for qualified property, so the entire qualifying cost is deducted in the year the property is placed in service. After the allowance is figured, the depreciable basis must be reduced by the amount of the special depreciation allowance before computing the regular MACRS depreciation deduction. When the allowance is 100%, there is no remaining cost or basis left to depreciate under MACRS, and no regular depreciation deduction is available for that property.
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 (2021), How To Depreciate Property (IRS)
Electing out, by class of property
A taxpayer is not required to claim the special depreciation allowance and may elect out of it on a class-by-class basis. The election allows a person to decline the allowance for all property within a single class of property placed in service during the tax year. The election is made by attaching a statement to the tax return that identifies both the election being made and the specific class of property it covers. Each person owning qualified property - such as a partnership, an S corporation, or each member of a consolidated group - must make the election separately. Generally the election must be filed on a timely filed return, including extensions, for the year the property is placed in service. If the return was timely filed without the election, the taxpayer may still make the election by filing an amended return within a short period after the original return's due date, writing the appropriate regulatory reference on the amended return and attaching the election statement. Once made, the election generally cannot be revoked without IRS consent.
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.
Publication 946 (2021), How To Depreciate Property (IRS)
Recapture when you dispose of the property
When a taxpayer disposes of property for which a special depreciation allowance was previously claimed, the gain on that disposition is subject to recapture. The gain is recaptured - that is, included in ordinary income - up to the amount of the special depreciation allowance that was previously allowed or allowable on the property. This means the ordinary-income recapture amount is measured by the total allowance taken, not by the current-year depreciation. Any gain exceeding the allowance may be treated as capital gain under the usual rules. The provision ensures that the accelerated benefit of the special depreciation allowance is recovered as ordinary income when the property is sold, exchanged, or otherwise disposed of, rather than being taxed at the lower capital gains rate. The recapture rules apply separately from, and in addition to, the ordinary depreciation recapture that already applies to regular MACRS deductions.
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 (2021), 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.
2021 Instructions for Form 4562 (IRS)
- Special depreciation allowance
is eligible for a special depreciation allowance of 100% of the depreciable basis of the property.