Bonus Depreciation Before Act 72 of 2018 Before Act 72 of 2018, section 401(3)1.(q) of the Pennsylvania Tax Reform Code (TRC) disallowed bonus depreciation in the year in which assets were placed in service, but allowed corporations to deduct the federal.
The “50% bonus depreciation” was to be phased down to 40% for property placed in service in calendar year 2018, 40% in 2019 and 0% in 2020 and afterward. The new tax law for property placed in service and acquired after Sept. 27, 2017 raised the 50% rate to 100%. Additionally, the property eligible for bonus depreciation can be new or used.
Bonus depreciation. New York and NYC do not conform to federal 168(k) bonus depreciation with the exception of Liberty zone property. Adjustments transfer from federal data entry to Screens NYDepr and NYCDepr and are calculated on Form IT-398. Section 179. New York and NYC conforms to IRC section 179 expense deduction and no adjustments will be.
The allowable bonus depreciation starts to decline after 2022. It falls to 80 percent in 2023, 60 percent in 2024, 40 percent in 2025 and 20 percent in 2026. Remember, though tax reform gives you expanded tools to accelerate depreciation, it may not benefit you to use them in every case.
Under prior law, taxpayers could take a 50% bonus depreciation deduction on purchases of qualifying property, which included new tangible personal property, as well as land improvements and tenant improvements with a 15-year depreciable life.
The takeaway. The bonus depreciation provisions under the Act are generally expanded as compared to prior law. Not only is qualified property acquired and placed in service after September 27, 2017 eligible for 100% bonus depreciation, considerably more property will be eligible for bonus depreciation because of the expansion of applicability to used property, qualified films and television.
Bonus Depreciation Tax reform also included significant changes to bonus depreciation with rules becoming effective for assets acquired and placed into service after September 27, 2017. Percentages are now doubled to 100% and, unlike with the Section 179 deduction, a taxpayer can take bonus depreciation on all eligible asset additions with no limit on the deduction or amount taken.
The TCJA extended and modified bonus depreciation, allowing businesses to immediately deduct 100% of the cost of eligible property in the year it is placed in service, through 2022. The amount of allowable bonus depreciation is then phased down over four years: 80% will be allowed for property placed in service in 2023, 60% in 2024, 40% in 2025, and 20% in 2026.