Bonus Depreciation Phase-Down: Capital Investment Decisions in 2026
Accelerated depreciation has been a powerful lever for business owners.
In prior years, bonus depreciation allowed immediate expensing of a significant percentage of qualified property. That front-loaded deductions and reduced taxable income in capital-intensive years.
As bonus depreciation phases down, the economics shift.
For owners making large equipment purchases, real estate improvements, or infrastructure investments, the deduction profile now stretches over time rather than collapsing into year one.
That changes:
- Cash flow forecasting
- Income stacking decisions
- Interaction with QBI
- Interaction with interest deductibility
In high-income years, the instinct may be to accelerate deductions. But in some cases, smoothing deductions over multiple years improves bracket management and liquidity stability.
The question is not simply “Can we deduct this?” It is “In which year does the deduction create the most structural value?”
Capital expenditures should be aligned with:
- Projected income volatility
- Ownership distributions
- Estate planning timing
- Financing structure
Tax acceleration is a tool. It is not always the objective.
Written by Christi Shell, CWS®, AAMS®, BFA™, CETF®, Managing Director and Private Wealth Strategist at Shell Capital Management, LLC.
To speak with Christi about your financial situation, request a private consultation.
Shell Capital Management, LLC is a registered investment adviser. This material is for informational and educational purposes only and does not constitute investment, legal, or tax advice. Advisory services are only offered to clients or prospective clients where Shell Capital Management, LLC is properly registered or exempt from registration. Any views are as of the date published and may change. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results.