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For US business owners, depreciation is a powerful tax shield. The IRS allows you to write off the cost of assets over time (MACRS) or immediately (Section 179).
MACRS is the standard depreciation method for most business assets. It assigns a specific "recovery period" to each asset class.
| Asset Class | Recovery Period | Examples |
|---|---|---|
| 3-Year Property | 3 years | Tractor units, racehorses |
| 5-Year Property | 5 years | Cars, trucks, computers, copiers |
| 7-Year Property | 7 years | Office furniture, fixtures, equipment |
| Residential Rental | 27.5 years | Apartment buildings, rental homes |
| Non-Residential | 39 years | Office buildings, warehouses |
Section 179 allows you to deduct the full cost of qualifying equipment in the year you buy it, rather than depreciating it over years.
Bonus depreciation is an additional first-year allowance. The Tax Cuts and Jobs Act of 2017 allowed 100% bonus depreciation and scheduled it to phase down starting in 2023 — but the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently restored the 100% rate for property acquired on or after January 19, 2025. The phase-down below is the superseded, pre-OBBBA schedule, shown for historical reference only.
Passenger vehicles (under 6,000 lbs) are subject to strict caps (Section 280F). You cannot write off a $100,000 car entirely in year 1 using Section 179.
Vehicles over 6,000 lbs (like heavy SUVs and trucks) are often exempt from these low caps.
Last updated: July 2026. Tax laws change frequently - consult a qualified CPA for your specific situation.