Assets that depreciate quickly are typically consumer goods, electronics, and vehicles that lose value due to rapid technological advancements, wear and tear, or high initial markups. Key examples include smartphones (losing up to 50–78% value in a year), new cars (significant drop upon purchase), computers, and software.
Some of the fastest depreciating assets to be cautious of, in case you're planning on buying any of them in 2026...
Fastest depreciation occurs with new cars, mainstream consumer electronics, fast-fashion clothing, boats/RVs, and many mass-market household goods. To minimize loss: buy used, choose quality/durable items, keep meticulous records, or use leasing models.
Electronics, fashion, cars, and vacation timeshares can all lose their value rapidly in the first year that you own them. Because you won't make much money selling them, it is smart to hang on to these items for as long as they work and you wish to use them.
The 150% reducing balance method divides 150 percent by the service life years. That percentage will be multiplied by the net book value of the asset to determine the depreciation amount for the year.
The double declining balance method of depreciation, also known as the 200% declining balance method of depreciation, is a form of accelerated depreciation. This means that compared to the straight-line method, the depreciation expense will be faster in the early years of the asset's life but slower in the later years.
Both new and used property can qualify if the asset is new to you and used in your business during that tax year. Let's say your business buys $1 million worth of equipment. With 100 percent bonus depreciation, you can deduct the full amount in year one.
100% bonus depreciation qualifies for new or used tangible business property with a MACRS recovery period of 20 years or less, including equipment, machinery, furniture, certain vehicles, off-the-shelf software, and some building improvements (like QIP), provided the property is acquired and placed in service by specific deadlines, with recent legislation (OBBBA) making it permanent for qualifying assets acquired after Jan 19, 2025, and expanding eligibility to include some used property and specific production property.
Test 1 – asset costs $300 or less
To claim the immediate deduction, the cost of the depreciating asset must be $300 or less. The cost of an asset is generally what you pay for it (the purchase price), and other expenses you incur to buy it – for example, delivery costs.
The four methods for calculating depreciation include straight-line, declining balance, units of production and sum of years digits (SYD). The best depreciation method for a company to use depends on its accounting needs, types of assets, size and industry.
Depreciable property includes machines, vehicles, office buildings, buildings you rent out for income (both residential and commercial property), and other equipment, including computers and other technology.
Examples of Non-Depreciated Assets
Investments and other intangible assets. This could refer to stocks, bonds, franchises, goodwill, or agreements not to compete. Collectibles, such as coins, cards, and similar memorabilia. Personal property, including your home and car.
Bonus Depreciation: main points and limitations
There is no maximum amount, and no limit on purchases. You can deduct your entire asset or vehicle fleet regardless of how much you paid for the vehicles. Bonus Depreciation is at 100% for 2025. Businesses do not have to show positive income.
The IRS allows taxpayers to deduct up to $3,000 of realized investment losses ($1,500 if married filing separately) against ordinary income each year. This deduction applies only to losses in taxable investment accounts and must be realized by December 31st to count for that tax year.
ANSWER: Safe Harbor IRA is a specialized individual retirement account (IRA), established when a qualified retirement savings plan elects to “force out” their small-balance (<$7,000) participants, after they've separated employment.
Yes, interest paid on business loans is generally 100% tax-deductible as a business expense. This includes interest on business credit cards, lines of credit, mortgages for business property, and equipment loans.
If you're acquiring (or have recently acquired) property for business or income-generating purposes, you may qualify for 100% bonus depreciation. To determine what's eligible and how to best reduce your tax burden, consider conducting a cost segregation study.
For most landlords, GDS is the best depreciation method for rental property because it uses a consistent schedule and maximizes deductions within IRS rules.
Yes, you can still take 40% bonus depreciation in 2025 for property acquired on or before January 19, 2025, but for property acquired after January 19, 2025, 100% bonus depreciation is generally reinstated under the One Big Beautiful Bill Act (OBBBA) (OBBBA), though you can elect the 40% rate if it's more beneficial. The OBBBA effectively reversed the previous phase-down, making 100% bonus depreciation permanent for new acquisitions after the cutoff date, with options for strategic planning.
Expensing an item may bring in more money in the short term, but once you have expensed it, it does not qualify for write-offs on future tax returns. Depreciating an asset may result in less money upfront, but could result in fewer taxes owed in the future.