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    Business Owner

    Bonus Depreciation

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    intermediate · $50K - $100K

    The One Big Beautiful Bill Act (OBBBA) restored 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025.

    This applies to both new and used equipment with a recovery period of 20 years or less.

    Combined with Section 179, businesses can deduct the full cost of qualifying assets in year one.

    Annual Limit

    No dollar limit (based on asset cost)

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    Key takeaways

    • The OBBBA restored 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025.
    • Applies to new and used property with a recovery period of 20 years or less.
    • Unlike Section 179, it can create or increase a net operating loss that carries forward.
    • The IRS applies Section 179 first, then bonus depreciation to the remaining basis.

    Requirements

    • Property with recovery period of 20 years or less
    • Acquired and placed in service during tax year
    • Works for new AND used equipment

    How to Implement

    1. 1Purchase qualifying business assets
    2. 2Calculate 100% bonus depreciation amount
    3. 3Report on Form 4562
    4. 4Can combine with Section 179

    The bottom line

    Bonus depreciation lets a business write off 100% of qualifying assets in year one, with no dollar cap and the ability to create a loss. It currently has no scheduled phase-out, though future law could change that.

    Frequently Asked Questions

    Educational Only: This information is for educational purposes. Consult a qualified financial advisor or tax professional before implementing.
    Last reviewed: April 2026

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    Sources

    1. Internal Revenue Service, Rev. Proc. 2025-32

      2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)

    2. Internal Revenue Service, Notice 2025-67

      2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)

    3. Internal Revenue Service, Rev. Proc. 2025-19

      2026 HSA and HDHP inflation-adjusted limits

    Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.

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