The One Big Beautiful Bill Act (OBBBA) permanently reinstated 100% bonus depreciation, as initially created by the Tax Cuts and Jobs Act (TCJA), for qualified property acquired and placed in service after January 19, 2025.
OBBB Changes to Bonus Depreciation
The bonus depreciation rate for 2025 pre-OBBB was just 40%. The OBBB, however, permanently reinstated 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025.
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.
A transitional election permits taxpayers to apply 40% or 60% bonus depreciation on vehicles purchased and placed in service after January 19, 2025. For vehicles placed in service between January 1, 2025, and January 19, 2025, the bonus percentage is 40%. You report these purchases to the IRS on Form 4562.
Yes, many individual provisions of the Trump-era Tax Cuts and Jobs Act (TCJA) from 2017 are set to expire at the end of 2025, reverting tax law to pre-2017 levels unless Congress acts, with key changes including the standard deduction, SALT deduction cap, and estate tax rules set to change, although legislation like the "One Big Beautiful Bill Act" (OBBBA) has since extended some of these cuts into the future, changing the original expiration cliff.
Here's a summary of key changes for the 2025 tax year. The seven federal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now permanent. Standard deductions increased, plus a new “bonus” deduction for older adults. Child tax credit increased to $2,200 per qualifying child.
If the individual tax cuts expire, taxpayers in all income groups would face higher and more complicated taxes. Machinery and equipment expensing is a key provision that, if allowed to expire, would especially harm capital-intensive industries like manufacturing.
If you have a net loss for your business, you are able to claim bonus depreciation (but not the Section 179 deduction). If you have expensive purchases, claim bonus depreciation because you won't face a limit on spending. If you buy assets with a shorter recovery period, use bonus depreciation.
For tax year 2025, a vehicle with a GVWR over 6,000 pounds can offer significant tax deductions, primarily through Section 179 expensing, allowing immediate write-offs for business use, though SUVs have a $31,300 cap, while heavy trucks/vans (over 6,000 lbs GVWR) can qualify for much larger first-year deductions, potentially up to 100% with bonus depreciation, for qualifying business use and placement in service by year-end.
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.
Yes, in 2024, each parent could gift $18,000 to a child (totaling $36,000 per child for the couple) without tax implications, and for 2025, that amount increased to $19,000 per parent ($38,000 per child) because the annual gift tax exclusion is adjusted for inflation, requiring separate checks for each parent to utilize the full amount, according to TurboTax, Yahoo Finance, Guardian Life, IRS (.gov), and Mercer Advisors.
But entering 2026 with a clear, updated estate plan can bring clarity, control, and a sense of readiness for whatever the coming years hold. Whether an estate plan is brand new or years old, revisiting it with intention can help ensure that it still reflects personal goals, family needs, and current laws.
January 23, 2026
The answer is a straightforward yes. Notice 2026-11 confirms that the existing framework in play under Section 1.168(k)-2 is still in play, with a simple date swap. Instead of 9/27/2017 being the key date in play, we're now using 1/19/2025 as the major threshold.
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.
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.
Income Tax – Car Depreciation Limit
The car limit for 2025–26 is $69,674. This is the maximum value you can use to calculate depreciation for a car that is: used for business purposes, and. first used or leased during the 2025–26 income year.
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.
Electing out will allow you to offset the higher income with more depreciation expense in the later years. If you plan to sell the purchased property in a year in which you are in a higher tax bracket, any depreciation recapture would be taxed at the higher rate.
Section 179 deductions are also limited to annual taxable business income, meaning that a business cannot deduct more money than it made. Bonus depreciation does not have this limit and can be used to create a net loss.
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.
The 2025 Federal Tax Debate
Much like the 2017 tax law, the new law favors the richest taxpayers. More than 70 percent of the net tax cuts will go to the richest fifth of Americans in 2026, only 10 percent will go to the middle fifth of Americans, and less than 1 percent will go to the poorest fifth.
High-Income Taxpayers Paid the Majority of Federal Income Taxes. In 2022, the bottom half of taxpayers earned 11.5 percent of total AGI and paid 3 percent of all federal individual income taxes. The top 1 percent earned 22.4 percent of total AGI and paid 40.4 percent of all federal income taxes.