100% Bonus Depreciation Is Back — and Permanent
Part of our 2025 Tax Law Changes guide — the complete breakdown of the One Big Beautiful Bill Act.
Under the 2017 law, 100% bonus depreciation was always temporary — it began phasing down after 2022 (80%, then 60%, and on toward zero). The 2025 One Big Beautiful Bill Act reversed that phase-down and restored 100% bonus depreciation on a permanent basis for qualifying property acquired and placed in service on or after an early-2025 effective date.
What qualifies
Bonus depreciation generally applies to new and used tangible personal property with a recovery period of 20 years or less, off-the-shelf software, and qualified improvement property. Combined with a higher Section 179 expensing limit, most businesses can now fully deduct the cost of eligible equipment in the year it is placed in service.
Cost segregation is back in the spotlight
With full expensing restored, cost-segregation studies — which reclassify components of a building into shorter-lived property — become far more valuable again. Reclassified 5-, 7-, and 15-year property can be immediately expensed rather than depreciated over decades.
Watch the interactions
- Depreciation recapture still applies on sale.
- Passive activity and at-risk rules can defer losses for real-estate investors.
- State conformity varies — many states decouple from federal bonus depreciation.
- The business-interest limitation and the Section 199A deduction interact with the larger deductions.
For capital-intensive clients, revisit fixed-asset schedules and consider whether a Form 3115 change of accounting method can capture missed deductions.
This article is educational and current as of its publication date. Federal tax provisions — including dollar thresholds, phase-outs, and effective dates — change frequently and many items described here are temporary. Confirm the current statute, IRS guidance, and your client’s facts before relying on any point below. This is not legal or tax advice.
