What type of loans does bonus depreciation supplement?

Bonus depreciation supplements loans specifically used for the purchase of qualifying equipment or certain types of property. This tax incentive allows businesses to deduct a significant percentage of the cost of eligible assets in the year they are placed in service, rather than spreading the deduction over the life of the asset.

By providing this immediate tax break, businesses can offset some of the financial burden associated with obtaining loans for equipment purchases. Understanding this connection is crucial, as it highlights how tax strategies can enhance the financial advantages of acquiring new equipment through loans. Each of the other options—fixed-rate loans, term loans, and revolving credit lines—does not directly correlate with the concept of bonus depreciation, which specifically targets the type of asset being financed rather than the structures of the loans themselves.