Arizona Bonus Depreciation

Recalculated Arizona Depreciation

NOTE: For more information and examples of how to calculate Arizona bonus depreciation, see the department’s procedure, ITP 16-2, Procedure for Individuals who Claim Federal and/or Arizona Bonus Depreciation.

For assets placed in service in taxable years beginning before December 31, 2012, enter the total amount of depreciation allowable pursuant to IRC § 167(a) for the taxable year calculated as if you had elected not to claim bonus depreciation for eligible properties for federal purposes.

For assets placed in service during taxable years beginning from and after December 31, 2012 through December 31, 2013, the amount of the subtraction for these assets depends on the method used to compute the depreciation for these assets.

For assets placed in service in taxable years beginning from and after December 31, 2013 through December 31, 2015, enter the total amount of depreciation allowable pursuant to IRC § 167(a) for the taxable year calculated as if the bonus depreciation is 10% of the amount of federal bonus depreciation pursuant to IRC § 168(k).

For assets placed in service in taxable years beginning from and after December 31, 2015 through December 31, 2016, enter the total amount of depreciation allowable pursuant to IRC § 167(a) for the taxable year calculated as if the bonus depreciation is 55% of the amount of federal bonus depreciation pursuant to IRC § 168(k).

Assets Placed in Service During a Taxable Year Beginning in 2017 or Later (Providing Federal Bonus Depreciation is Allowed) For assets placed in service during taxable years beginning in 2017 and later, Arizona law requires a taxpayer that claims bonus depreciation on the federal return to claim Arizona bonus depreciation on the Arizona income tax return filed for that year. The Arizona bonus depreciation is 100% of the amount of bonus depreciation claimed on the federal income tax return. The taxpayer takes the subtraction on his or her Arizona income tax return filed for the taxable year for which the asset was placed in service and for which federal bonus depreciation was claimed. The taxpayer must also take a subtraction for regular depreciation, using the same method of depreciation used for federal income tax purposes, but calculated on the Arizona basis. This amount must be subtracted each year, until the asset is fully depreciated or until the taxpayer either sells or otherwise disposes of the asset. 

NOTE: A taxpayer who also claims Arizona bonus depreciation for assets placed in service prior to January 1, 2017, must compute the allowable bonus depreciation for each asset based on the allowable subtraction established for the taxable year in which the asset was placed in service.