Bonus depreciation was first enacted in 2008 as a temporary measure to help our ailing economy. As first enacted, and then extended for two years, the deduction was a first-year 50% bonus deduction. It allowed taxpayers to depreciate 50% of the cost of qualified property during the first year the property was placed in service. It was scheduled to expire at the end of 2010.
Under the tax laws passed in December 2010, bonus depreciation was extended and increased to 100% for qualified investments made after September 8, 2010 through the end of 2011. In addition, 50% bonus depreciation will be available for calendar year 2012.
For more information on bonus depreciation, see Nolo's book Tax Savvy for Small Business.