when a business buys an asset the tax treatment for that asset is traditionally to spread its cost of over its useful life this process known as depreciation reduces a company s net earnings and tax liability 
bonus depreciation is an accelerated business tax deduction instead of allocating the cost evenly over the life of an asset congress enacted rules that allow businesses to deduct a fixed percentage of an eligible asset s cost upfront although a company might otherwise expense the same total amount over the asset s life bonus depreciation gives it a substantial tax break right away the tax cuts and jobs act passed in 2017 made major changes to the rules on bonus depreciation most significantly it doubled the bonus depreciation deduction for qualified property as defined by the internal revenue service irs from 50 to an initial 100 the 2017 law also extended the bonus to cover used property under certain conditions history of bonus depreciationbonus depreciation has been around since 2002 but has changed over the years as the law has been updated qualifying assets for bonus depreciationbonus depreciation is only applicable to certain business assets for example tangible property must have a maximum useful life of 20 years under the tax cuts and jobs act eligibility requirements also stipulated that the rules explicitly disqualify certain types of assets from being eligible for bonus depreciation under the tax cuts and jobs act assets are not eligible if they are bonus depreciation rules can be complex and are subject to change so it s useful to consult a tax advisor who specializes in them 