Tax
Bonus Depreciation
A 100% first-year depreciation deduction for qualifying property, permanently restored by OBBBA for post-January 19, 2025 acquisitions.
Bonus depreciation lets businesses deduct qualifying property cost in year one, on top of regular depreciation. The One Big Beautiful Bill Act (2025) permanently restored the rate to 100% for qualified property acquired and placed in service after January 19, 2025, reversing the TCJA phase-down that had dropped the rate to 80% (2023) and 60% (2024).
Used most aggressively in real estate (combined with cost-segregation studies to bucket structural components into shorter-lived asset classes) and equipment-heavy businesses.
Unlike Section 179, bonus depreciation has no income limit and can create a net operating loss, making it a tool for shifting deductions into high-income years.
Common pitfalls
- Assuming the old phase-down rates still apply; OBBBA restored 100% for property acquired and placed in service after January 19, 2025
- Not coordinating with cost-segregation studies on real-estate purchases; bonus depreciation supercharges cost-seg benefits
- Forgetting that some states (California is the big one) don't conform to federal bonus depreciation
Related service
See tax and CPA servicesRelated terms
Have a Bonus Depreciation situation in your business?
Federal, state, and local returns prepared and reviewed by a licensed CPA, with the planning done before year-end rather than after it.