Small businesses have unique characteristics and needs. Hence, the IRS has some tax provisions that are designed for or may be particularly beneficial to smaller companies. Let’s take a look one in particular.
BONUS DEPRECIATION
Businesses must generally write off the costs of assets over their “useful life”— a set number of years based on the kind of asset. With bonus depreciation, businesses can immediately deduct those costs, subject to certain limits.
Under the TCJA, 100% bonus depreciation was only allowed through 2022, subject to a phaseout that would allow a deduction for 80% of costs in 2023 and 60% in 2024.
Under OBBBA, the 100% bonus depreciation provision is made permanent.