Yes, bonus depreciation is 100% for 2025, but only for qualified property acquired and placed in service after January 19, 2025, thanks to the new One Big Beautiful Bill (OBBB) Act, which permanently reinstated the full deduction. This brings back the 100% expensing that had been phasing down, with prior rules (40% for 2025) applying to assets acquired before the January 20, 2025, cutoff.
Yes, 100% bonus depreciation is back for eligible property acquired and placed in service after January 19, 2025, thanks to the "One, Big, Beautiful Bill" (OBBB) Act, which permanently reinstated it, reversing the phase-out schedule that would have reduced it to 40% for 2025 under prior law. This allows businesses to deduct the full cost of new equipment, machinery, and other qualified assets in the first year, significantly impacting tax planning.
Business owners got their wish in 2025 when Congress made 100% bonus depreciation permanent. The provision, which was initially part of the 2017 Tax Cuts and Jobs Act (TCJA), began to phase out in 2023. However, the One Big Beautiful Bill Act (OBBBA) permanently reinstated the deduction for qualifying property.
You typically have to pay payroll taxes including the 1.45% Medicare tax plus the 6.2% Social Security tax on the amount of your wages, including your bonus. However, the Social Security tax is limited to the first $176,100 of wages for 2025, up from $168,600 for 2024.
From 2025 to 2028, adults age 65+ can claim a temporary bonus deduction of $6,000 if single or $12,000 if married filing jointly. For the 2025 tax year, the total standard plus bonus deduction for those age 65 and older is $21,750 for a single person and $43,500 for a married couple filing a joint return.
Introduced in House (01/20/2025) This bill allows a tax deduction for bonuses received by an individual, subject to income limitations, through 2029. The amount of the deduction may not exceed 15% of the individual's regular wages from the same employer.
Employers can use two different withholding methods: The percentage method (a flat 22% rate on bonuses under $1 million) or the aggregate method, which combines your bonus with regular pay.
You can't entirely avoid taxes on a bonus, but you can significantly lower the amount by contributing to tax-advantaged accounts (401(k), IRA, HSA), deferring the bonus to a year you expect to be in a lower tax bracket, or making charitable donations, thereby reducing your taxable income or increasing deductions at tax time.
Some of the major tax changes effective from April 1, 2025, are revised tax slabs, rebate of up to Rs. 60,000, revised ITRU deadlines, calculation of partner's remuneration allowable as a deduction and revised TDS/TCS threshold limits. What is the Rebate available under section 87A?
Bonuses under $1 million are typically taxed at a flat rate of 22%. Example: If you receive a bonus of $20,000, the flat federal tax rate of 22% would amount to $4,400. If you receive a bonus above $1 million, you'd pay the 22% rate on the first million. Beyond that, the rate jumps to 37%.
If they say 100% that means they are paying their bonuses in full and they are likely setting realistic and attainable goals.
In general, the OBBB provides a permanent 100‑percent additional first year depreciation deduction for qualified property acquired, or specified plants that are planted or grafted, after Jan. 19, 2025.
Limited circumstances for stand-alone 179 benefits.
The Section 179 expense limit and phase-out threshold ($2,560,000 and $4,090,000, respectively, for 2026) are now permanent parts of the tax code that are adjusted annually for inflation.
100% bonus depreciation, when placed in service between 9/28/2017 and 12/31/2022. 80%, when placed in service between 1/1/2023 and 12/31/2023. 60%, when placed in service between 1/1/2024 and 12/31/2024. 40%, when placed in service between 1/1/2025 and 12/31/2025.
New federal tax laws for 2025, largely from the "One Big Beautiful Bill" (OBBBA) passed in mid-2025, permanently extend key parts of the 2017 Tax Cuts and Jobs Act (TCJA), enhance deductions like SALT (State & Local Tax) to $40k, add new ones for tips, overtime, and car loan interest, expand the Child Tax Credit (CTC) to $2,200, increase estate tax exemption, and offer significant business deductions like 100% bonus depreciation for some assets, making taxes lower for many while making brackets permanent.
The 2025 tax legislation signed into law by President Trump, commonly referred to as the One Big Beautiful Bill Act, largely preserves the existing capital gains tax framework. Long-term capital gains rates remain set at 0%, 15% and 20%, with no changes to the underlying brackets.
Under the new income tax regime for 2025-26, any taxable income up to ₹12,00,000 attracts a full rebate of ₹60,000 (under Section 87A), resulting in a nil tax liability.
It's not an obvious move, but you might want to try deferring your bonus, if it makes sense. The point of deferring your bonus is to push any tax payments on it into the next year. So if you usually receive a bonus in December, you might be able to push it a few weeks, if you ask your employer.
Remember to submit a new W-4 form with your regular withholding allowances after you receive the bonus income. If you fail to change your allowances back, you could have insufficient withholding for the rest of the year. This could result in a hefty tax bill when you file your next tax return.