Bonus depreciation is often presented as an automatic win, but that is not always true. For many businesses, full expensing today can reduce flexibility in future years when taxable income rises. The right election should support a multi-year plan.

Questions to Answer Before Electing

  • Is your priority current-year cash flow or multi-year tax smoothing?
  • Will the asset portfolio and income profile remain similar next year?
  • Do state-level conformity differences change the net benefit?

Practical Decision Framework

We recommend running at least two scenarios: immediate expensing and standard recovery. Comparing both against projected revenue and compensation plans usually reveals which path provides better long-term stability.

Depreciation is not just a deduction decision; it is a cash-flow and planning decision.

Planning Takeaway

Use side-by-side projections before filing. The tax-efficient choice this year may not be the best strategic choice over three years.