Bonus Depreciation

For most of the last few years, bonus depreciation was dying on a schedule. The 2017 tax law took it to 100% through 2022, then stepped it down: 80% in 2023, 60% in 2024, 40% in 2025, on its way to zero. The One Big Beautiful Bill Act killed that phase-down. Property you acquire and place in service after January 19, 2025 qualifies for a full 100% first-year write-off, and this time it's permanent — no sunset clause to plan around.

Here's the catch buried in the dates. The asset has to be both acquired and placed in service after January 19, 2025. If you signed a written binding contract before January 20, 2025, the IRS treats the property as acquired on that contract date, which can knock it out of the 100% bracket even if it didn't show up at your dock until later. Notice 2026-11 spells out the interim rules. If you closed deals around the changeover, have your CPA pin down the acquisition date before you assume you get the full deduction.

Bonus depreciation overlaps with Section 179 but isn't the same tool. Section 179 caps out — $2,560,000 of deduction in 2026, phasing out dollar-for-dollar once you place more than $4,090,000 of property in service — and it can't push you into a loss. Bonus depreciation has no dollar ceiling and can create or deepen a net operating loss, which you carry forward against future profits. Most businesses layer them: Section 179 first to fine-tune which assets get expensed, then bonus depreciation to sweep up the rest.

What qualifies: tangible property with a MACRS recovery period of 20 years or less — machinery, equipment, furniture, fixtures, vehicles, land improvements — plus qualified improvement property (interior buildout of nonresidential space). New or used both count, as long as the used property is new to you. The building itself doesn't qualify; its 39-year recovery period is too long. That's where a cost segregation study earns its fee, carving a property purchase into shorter-lived components you can expense now.

The trade-off is timing, not free money. A 100% write-off this year means no depreciation deductions on that asset in any future year — you've spent the whole tax benefit up front. That's a great deal when you're in a high bracket now and expect to stay there, and a worse one if you're a startup with low current income and rising future rates. Run the year-one cash savings against what those deductions would be worth spread out, then decide. You can also elect out by asset class if deferring makes more sense.