Yes, 100% bonus depreciation is included in the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. It permanently restores 100% bonus depreciation for qualifying business assets acquired and placed in service after January 19, 2025, reversing the previous phase-down schedule.
The One Big Beautiful Bill Act (Act), enacted on July 4, 2025, permanently extends 100% bonus depreciation under Section 168(k) and introduces a new elective 100% depreciation allowance under Section 168(n) for qualified production property (QPP).
The OBBB — which was the Trump administration's signature tax and domestic policy bill — officially reinstated 100% bonus depreciation for property acquired after January 19, 2025, and placed in service after that same date.
Prior to the OBBBA, it was scheduled to phase down annually until it reached 0%. The OBBBA reversed course and permanently restored 100% bonus depreciation for assets acquired and placed in service after January 19, 2025.
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.
Bonus depreciation was scheduled to end in 2027. The One Big Beautiful Bill Act (OBBBA) permanently increased bonus depreciation to 100 percent of basis for qualified property acquired after January 19, 2025.
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.
The big plus is timing. Instead of recovering an asset's cost over multiple years, bonus depreciation lets you deduct a large share—now 100% for many assets—in the year the property is placed in service, accelerating deductions and typically improving after-tax cash flow.
The maximum amount of section 179 allowed increased from $1,220,000 to $2,500,000 for tax year 2025. The $3,050,000 investment limitation increased to $4,000,000.
100% bonus depreciation qualifies for new or used tangible business property with a MACRS recovery period of 20 years or less, including equipment, machinery, furniture, certain vehicles, off-the-shelf software, and some building improvements (like QIP), provided the property is acquired and placed in service by specific deadlines, with recent legislation (OBBBA) making it permanent for qualifying assets acquired after Jan 19, 2025, and expanding eligibility to include some used property and specific production property.
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.
Tax Foundation estimates that, altogether, these seven provisions cut individual income taxes by $129 billion in 2025. Beyond the individual tax cuts, the OBBBA also changed several business-side provisions for 2025, including 100 percent bonus depreciation.
At the end of 2025, the individual portions of the Tax Cuts and Jobs Act expire all at once. Without congressional action, 62 percent of filers could soon face a tax increase relative to current policy in 2026. At the same time, the price tag for extending the 2017 Trump tax cuts is in the trillions.
The main downsides of bonus depreciation include losing future deductions by taking them upfront, potentially increasing future taxable income, facing higher "recapture" taxes if the asset is sold, and dealing with complex rules or state-level nonconformity, making it less beneficial for short-term investors or those in lower tax brackets who might need deductions later. It also creates large upfront tax benefits that might not align with book income, affecting financing, and rules change frequently, requiring constant tax planning.
Notice 2026-11 allows a taxpayer to elect under IRC Section 168(k)(5) to claim 100% bonus depreciation for specified plants that are planted, or grafted to a plant that was previously planted, after January 19, 2025, by following the provisions of Treas.
The recent tax law reinstates full bonus depreciation—meaning qualifying property placed in service on or after January 20, 2025 can often be expensed immediately rather than spread across a depreciation schedule.
Under the bonus depreciation rule, you can take an additional deduction of 100% of the cost of eligible assets in the first year of ownership. That can result in significant tax savings. You can even use bonus depreciation to create a net operating loss, which you can carry forward to offset future income.
Instead of spreading deductions out over several years, you can take a 100% deduction in year one. The OBBB Act reinstated 100% bonus depreciation starting in 2025, reversing the scheduled phase-down. Not all vehicles are treated the same under the tax code.
If the vehicle weighs more than 6,000 pounds and is used more than 50% for business, you can write off up to $28,900 in the first year, and potentially even more with bonus depreciation. Let's break it down: Buy a qualifying vehicle for $60,000, and you could write off a large portion of that cost in year one.
Cars that qualify for 100% capital allowances (First-Year Allowance) are brand new, fully electric cars with zero CO2 emissions (0 g/km), allowing businesses to deduct the entire cost from taxable profits in the year of purchase, provided they meet environmental and usage conditions and aren't second-hand. This significant tax relief applies to new, unused zero-emission vehicles, including certain electric vehicles and even some traditional black cabs, but not hybrids or used EVs.
On July 4, 2025, President Trump signed the 2025 tax reform into law as P.L. 119-21, Republicans' “One Big Beautiful Bill.” Among its most impactful provisions is the permanent restoration of 100% bonus depreciation, offering long-term clarity for tax planning and capital investment strategies.
Another common option for helping with current tax liabilities is to contribute to a tax-advantaged account, such as a 401(k), traditional IRA, or Health Savings Account (HSA). If you have one of these accounts, consider using a portion of your bonus to make a qualifying contribution.
Example: Calculating car depreciation
You started using your car for business on January 1, 2022. The car costs you $30,000, and you use it for business 60% of the time. This means the part of the car's cost you can depreciate is: $30,000 × 60% = $18,000.