Why Jeffrey Levine Doesn’t Buy Cat Food, or the Bonus Depreciation Hype 

If you buy something unneeded on sale, are you really saving money? 

Clients that own their own businesses face a similar question when using generous bonus depreciation rules that were made permanent by the One Big Beautiful Bill Act. The idea is that instead of spreading the cost of an asset purchase, like new machinery, vehicles or software over a period of years, clients can deduct the entire amount in the first year. For the right client, these accelerated depreciation methods are a powerful tax-saving strategy. The problem is that there is plenty of exaggerated online discourse about magic bonus depreciation “loopholes” that can push clients into unnecessary purchases, at best, and tax violations, at worst.

Jeff Levine, chief planning officer at Focus Partners Wealth, has seen so many misleading social media posts about bonus depreciation and the related Section 179 deduction that he said he fears for his sanity. “Even if I see cat food on sale for 90% off, I’m not buying it,” he wrote in a widely shared LinkedIn post. “I don’t have a cat.”

The Loophole That Wasn’t

Bonus depreciation, however, isn’t a loophole. It’s a straightforward application of the tax code being used as intended. It can be a great move when capital expenditures are needed, but all things equal, the increased tax deductions today come at the expense of lower tax deductions in the future. So, Levine observed, accelerated depreciation is really more a time-value-of-money play than anything else. Most importantly, accelerated depreciation methods don’t allow individuals to “save” anything, because to use them, they require the purchase of a qualifying asset. 

“Now, don’t get me wrong, for the right business owner in the right situation, these accelerated depreciation methods are pretty awesome,” Levine wrote. “And it’s entirely true that, compared to regular straight-line depreciation, electing to use bonus depreciation … can lower your taxes in a meaningful way.” 

Generally, early stage businesses, where cash flow is a significant concern, may realize greater benefits from the immediate tax reduction from bonus depreciation. Well-established businesses, on the other hand, may be better off taking a total spending-versus-savings approach. The so-called tax-savings “loopholes” distract people from focusing on things they can and should control, Saloni Gupta, a lead advisor with Avier Wealth Advisors in Bellevue, wrote in a comment. These include annual cash flow planning, optimizing tax efficient retirement savings and exit planning.

Don’t Get Distracted. Levine noted that the cost of buying that asset will definitely exceed the tax savings so it’s not really saving money. “In the end, accelerated depreciation methods are probably best thought of in a manner similar to that of a sale at the store,” he wrote. “If you were planning to buy something already, or were on the fence, then the sale can make now a pretty compelling time to make your purchase. But if you weren’t already thinking about the purchase, you probably shouldn’t let the fact that it’s on sale change your decision.”