Immediate depreciation benefits enable companies to deduct the full cost of new equipment, machinery, or other qualifying assets immediately, rather than depreciating them over several years.

This accelerated loss reduces taxable income in the year the purchase is made, providing a quick cash‑flow boost and a lower tax bill.

Why is this important?

Faster tax relief means more money stays in your business.

Lower taxable income may boost borrowing or investment opportunities.

Most small and medium‑sized businesses find the rules simple, and they cover many asset types.

This guide explains how immediate depreciation functions, 期末 節税対策 who qualifies, and how to exploit it.
Introduction to Immediate Depreciation

The U.S. tax code offers two main tools that let you deduct the entire cost of a qualifying asset in the year it’s placed in service: Section 179 and bonus depreciation (formerly known as "double‑depreciation" or "bonus").

Both encourage investment by providing a tax advantage for acquiring new equipment.

• Section 179: Lets you deduct up to a specified dollar limit of the cost of qualifying property.

• Bonus depreciation: Allows a 100 % deduction of qualifying property, pending phase‑out limits.

Assets Eligible for Immediate Depreciation

• Tangible personal property: Office furniture, computers, manufacturing equipment, trucks, and similar tangible assets.

• Certain software: Off‑the‑shelf software that is not a license or subscription.

• Qualified leasehold improvements: Upgrades in leased property.

• Energy‑efficient property: Solar panels, certain wind turbines, and other renewable‑energy equipment.

Property that does not qualify includes real estate, land, or items used primarily for investment purposes.

Section 179 Rules for 2024

• Maximum deduction: $1,160,000.

• Phase‑out threshold: The deduction decreases dollar‑for‑dollar when total equipment purchases in the tax year surpass $2,890,000.

• Business income cap: The deduction is limited to taxable income for the year; unused amounts may roll forward.

• Eligible entities: Sole proprietorships, partnerships, S‑corporations, C‑corporations, and LLCs.

Bonus Depreciation Rules (2024)

• Current rate: 100 % for property placed in service after December 31, 2022, and before January 1, 2026.

• Degredation rates: 80 % in 2026, 60 % in 2027, 40 % in 2028, 20 % in 2029, and 0 % after.

• Income limitation absent: Bonus depreciation may surpass taxable income; the surplus carries forward as a non‑business loss.

• Applies to all depreciable assets, including those not qualifying for Section 179, such as large commercial equipment.

Timing and Placement in Service

• The asset must be placed in service during the tax year.

• The service date dictates the deduction’s tax year; purchase date is irrelevant.

• For mid‑year purchases, you still get the full deduction, but you must keep accurate records of the date you started using the asset.

How to Claim the Deduction

• File Form 4562, Depreciation and Amortization, with your tax return.

• Record Section 179 expense in Part I.

• On Part II, specify the bonus depreciation amount.

• Attach a brief statement describing the assets, their cost, and the date placed in service.

Example Scenario

Picture a small manufacturing company purchasing a new CNC machine for $350,000 in March 2024.

• Section 179: The firm can expense the full $350,000 immediately, assuming it has less than $2.89 million in total purchases.

• Bonus depreciation: If the firm opts for bonus depreciation instead, it can also claim the full $350,000.

• If the firm’s taxable income for 2024 is $200,000, Section 179 would reduce it to zero, while bonus depreciation would create a $150,000 loss that can be carried forward.

Combining the Two Tools

• A firm may claim both Section 179 and bonus depreciation on one property, but the combined deduction cannot exceed the asset’s cost.

• Usually, firms use Section 179 first, then bonus depreciation on the residual cost.

Strategic Points

• Cash Flow: Immediate depreciation reduces taxes owed, freeing up cash.

• Future Tax Planning: By accelerating deductions now, you may increase taxable income in future years when the benefits of lower depreciation outweigh the current tax savings.

• If taxable income is low, Section 179 may provide limited benefit.

• Unclaimed Section 179 can be carried forward forever, but bonus depreciation carries forward only as non‑business loss.

Common Misconceptions

• "I can’t take both Section 179 and bonus depreciation." – You can, but the total deduction cannot exceed the asset’s cost.

• "Depreciation only applies to physical assets." – Software and certain energy‑efficient property also qualify.

• "If I take a deduction now, I’ll lose it later." – Depreciation is a tax benefit, not a cash outlay.

What You Need to Keep In Mind

• Keep detailed invoices, purchase orders, and service dates.

• Update your records annually to reflect any changes in limits or phase‑out thresholds.

• Consider consulting a tax professional to determine the optimal mix of Section 179 and bonus depreciation for your specific situation.

Final Thoughts

Immediate depreciation offers a strong advantage for cutting taxable income and enhancing cash flow.

Knowing Section 179 and bonus depreciation rules helps you time purchases, maximize deductions, and retain more cash.

Whether you’re a sole proprietor outfitting a new office or a mid‑size company investing in production equipment, the ability to write off entire assets in the year they’re placed in service can make a significant difference to your bottom line.