GPU Depreciation & Tax Strategies
What depreciation methods apply to GPU and datacenter equipment?
GPU and datacenter equipment qualifies for: (1) MACRS depreciation (5-year recovery for computers, 15-year for building improvements), (2) Section 179 expensing up to $1.16M in 2026, and (3) Bonus depreciation at 40% in 2026 (phasing down from 100% in 2022). Strategic use of these methods can recover 80%+ of equipment cost in year one, significantly reducing tax liability.
Key Data Points
- MACRS Period: 5 years (GPUs/Servers) vs 15 years (Improvements)
- Section 179 Limit: $1,160,000 (2026 tax year)
- Bonus Depreciation: 40% in 2026 (phases to 20% in 2027)
- Year 1 Recovery: ~57.6% possible with layered strategies
- Tax Savings: ~$1.5M per $10M purchase (combined Fed + State)
Depreciation Methods Comparison
Section 179 Expensing
Immediate deduction for qualifying equipment purchases.
- • 2026 limit: $1,160,000
- • Phase-out begins at $2.89M
- • Must have taxable income
- • Applies to new and used equipment
- • GPUs, servers, cooling qualify
Bonus Depreciation
Additional first-year depreciation on qualifying assets.
- • 2026: 40% (declining)
- • 2027: 20%
- • 2028+: Expired
- • No dollar limit
- • Can create NOL (unlike 179)
MACRS Depreciation
Standard accelerated depreciation schedule.
- • Computers/GPUs: 5-year
- • Electrical: 7-year
- • Building improvements: 15-year
- • Buildings: 39-year
- • Double declining balance method
Bonus Depreciation Phase-Out Schedule
| Tax Year | Bonus % | Strategy Implication |
|---|---|---|
| 2022 | 100% | Full year-one deduction |
| 2023 | 80% | Still significant first-year benefit |
| 2024 | 60% | Combine with Section 179 |
| 2025 | 40% | Layer strategies for maximum benefit |
| 2026 | 40% | Current year - accelerate purchases if possible |
| 2027 | 20% | Significantly reduced benefit |
| 2028+ | 0% | Expired (unless extended by Congress) |
GPU-Specific Considerations
Tax vs Economic Depreciation
Tax Depreciation (MACRS)
GPUs are 5-year MACRS property. With bonus depreciation (40% in 2026), you can deduct ~52% in year one.
Economic Depreciation (Reality)
GPUs depreciate faster economically: ~40-50% in year one, ~80% by year three due to technological obsolescence.
Implication: Tax benefits often understate actual value decline. Plan for replacement cycles accordingly.
Component Depreciation
Example: $10M GPU Purchase in 2026
Strategy A: Maximize Year One
Tax Savings Analysis
Note: Actual benefits depend on taxable income, entity structure, and state rules. Consult a tax advisor for your specific situation.
State-Specific Considerations
States That Conform to Federal
These states generally follow federal depreciation rules:
- • Texas (no income tax)
- • Nevada (no income tax)
- • Ohio (full conformity)
- • Georgia (full conformity)
- • Most other states
States with Different Rules
These states limit or modify federal depreciation:
- • California: No bonus depreciation
- • New York: Limited bonus conformity
- • New Jersey: Limited bonus conformity
- • Pennsylvania: Some limitations
- • Check specific state rules
Frequently Asked Questions
Can I use Section 179 and bonus depreciation together?
Yes. Apply Section 179 first (up to the limit), then apply bonus depreciation to the remaining basis. This maximizes first-year deductions. Note that Section 179 requires taxable income, while bonus depreciation can create an NOL.
What if I lease GPUs instead of buying?
Lessee typically cannot claim depreciation on leased equipment (lessor claims it). However, lease payments are fully deductible as operating expenses. For capital leases treated as purchases, you may claim depreciation.
How does depreciation affect GPU residual value calculations?
Tax basis (after depreciation) differs from fair market value (FMV). When selling GPUs, gain/loss is calculated on tax basis. If you took accelerated depreciation, you may have significant recapture on sale. Use our residual calculator to model scenarios.
Will bonus depreciation be extended beyond 2027?
Uncertain. Congress has extended similar provisions before (the Tax Cuts and Jobs Act extended it through 2026). Watch for legislative action, but plan conservatively assuming current phase-out schedule.
Model GPU Economics
Use our calculators to model residual values and full investment scenarios including tax benefits.
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