2023 Bonus Depreciation Percentage
The 2023 Bonus Depreciation Percentage is 80%.
Effective 2023-01-01Source: 2023 Instructions for Form 4562 (IRS)Verified 2026-08-29
Compared with 2022
| Item | 2022 | 2023 | Change |
|---|---|---|---|
| Special depreciation allowance | 100% | 80% | -20% (-20.0%) |
Who it applies to
Taxpayers who place qualifying property in service during tax year 2023 and wish to claim the additional first-year depreciation deduction on Form 4562.
What changed this year, and why
For 2023, the special depreciation allowance (bonus depreciation) is 80% of the depreciable basis of qualifying property placed in service during the tax year.
Common questions
- What is the bonus depreciation percentage for 2023?
- The special depreciation allowance for 2023 is 80% of the depreciable basis of qualifying property placed in service during the tax year.
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
Once you have calculated the special depreciation allowance for an item of qualified property, the portion of the asset's cost that was deducted as the allowance is no longer available for ordinary depreciation. The taxpayer takes the original cost basis of the property and subtracts the special depreciation allowance amount. The result is what the source calls the "remaining cost," and only that remaining cost may be depreciated under the regular Modified Accelerated Cost Recovery System (MACRS) rules described in chapter 4 of the publication. In effect, the bonus depreciation is taken first, off the top of the basis, and the conventional recovery schedule applies only to whatever cost has not yet been written off. The rule ensures that the same dollars of basis are not recovered twice - once through the accelerated allowance and again through the annual MACRS deduction.
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 (2023), How To Depreciate Property (IRS)
Electing out, by class of property
The taxpayer may choose not to take the special depreciation allowance at all, but the election is made by class of property rather than asset by asset. If the election is filed, no allowance may be claimed for any asset within that class that was placed in service during the tax year. To exercise the election, the taxpayer must attach a statement to the return identifying the election being made and naming the specific class of property it applies to. The election also must be made separately by each person who owns the qualified property - for example, by each partnership, by the S corporation itself, or by the common parent of a consolidated group on behalf of each member. Once the election not to claim the allowance for a given class is filed, it generally cannot be revoked without the consent of the IRS; a request to revoke is treated as a request for a letter ruling. The election is normally due on a timely filed return, including extensions, for the year the property is placed in service.
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 (2023), How To Depreciate Property (IRS)
Recapture when you dispose of the property
When property for which a special depreciation allowance was previously claimed is later sold, exchanged, or otherwise disposed of, the tax code requires that any gain realized on the transaction be treated as ordinary income rather than capital gain, but only to the extent of the allowance that was allowed or that could have been allowed in earlier years. This ordinary-income recapture rule prevents a taxpayer from converting what was effectively a depreciation deduction - taken at the accelerated allowance rate - into lower-taxed capital gain when the asset is ultimately sold. Any gain in excess of the recaptured allowance amount may still be eligible for capital-gain treatment under the normal rules. The publication directs readers to the recapture rules for MACRS depreciation in chapter 4 for additional procedural detail on how the recapture amount is computed and reported on the return for the year of disposition.
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 (2023), 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.
2023 Instructions for Form 4562 (IRS)
- Special depreciation allowance
Certain qualified property (defined below) acquired after September 27, 2017, and placed in service after December 31, 2022, and before January 1, 2024 (other than property with a long production period and certain aircraft), is limited to a special depreciation allowance of 80% of the depreciable basis of the property.