Accelerated depreciation

Accelerated depreciation is a tax and accounting method that allows a business to deduct a larger portion of an asset’s cost in the earlier years of its useful life.

This approach contrasts with straight-line depreciation, where the same amount is deducted each year. By front-loading depreciation expenses, businesses can reduce taxable income more significantly in the early years of an asset’s use, potentially improving cash flow.

This method is often applied to assets that lose value quickly or become obsolete faster, such as technology or vehicles. While beneficial for tax purposes, it results in lower deductions in the later years of the asset’s life.