Is 100% bonus depreciation in a new tax bill?
Asked by: Paris Rohan | Last update: April 29, 2026Score: 4.3/5 (69 votes)
Yes, the One, Big, Beautiful Bill Act (OBBBA), signed into law in mid-2025, permanently reinstated 100% bonus depreciation for qualified business property acquired and placed in service after January 19, 2025, reversing its previous phase-out and providing significant immediate expensing for new and used assets. The IRS issued guidance in January 2026 on this permanent change, confirming businesses can fully deduct the cost of eligible property in the first year, offering certainty for long-term investment.
Is there 100% bonus depreciation in 2025?
Yes, 100% bonus depreciation is back for 2025, but only for qualified property acquired and placed in service after January 19, 2025, thanks to the "One, Big, Beautiful Bill" (OBBB) Act, which reinstated it permanently, reversing the phase-down that had dropped it to 40% for most of 2025 before the law change.
Is bonus depreciation 100% for 2026?
WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued Notice 2026-11 PDF that provides taxpayers with guidance on the permanent 100% additional first year depreciation deduction for eligible depreciable property acquired after Jan. 19, 2025, provided by the One, Big, Beautiful Bill.
Is 100% bonus depreciation in the new tax bill?
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.
Will Trump bring back 100% bonus depreciation?
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.
NEW 100% Bonus Depreciation is Back! How To Use It To Save On Taxes
What years had 100% bonus depreciation?
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.
What happens if Trump tax cuts expire?
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.
What assets qualify for 100% bonus depreciation?
For 100% bonus depreciation (following the One Big Beautiful Bill Act of 2025), property generally needs to be tangible business property with a MACRS recovery period of 20 years or less, acquired and placed in service after January 19, 2025, with the original use starting with the taxpayer, including machinery, equipment, computers, certain software, office furniture, vehicles, and specific building improvements (like Qualified Improvement Property).
Why is 100% bonus depreciation better than a section 179 deduction?
Bonus depreciation has no annual limit on the deduction. 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.
How does the new $6000 deduction for seniors phase out?
The $6,000 senior deduction from the One Big Beautiful Bill (effective 2025-2028) phases out based on Modified Adjusted Gross Income (MAGI): full deduction for single filers under $75k ($150k joint), phasing out for MAGI between $75k-$175k (single) and $150k-$250k (joint), then fully gone above those upper limits, reducing by 6 cents for each dollar over the threshold. This is in addition to existing senior standard deductions.
Can each parent gift $18,000 to a child?
Yes, in 2024, each parent could gift $18,000 to a child tax-free, and in 2025 and 2026, that amount increased to $19,000 per person, allowing both parents to gift this amount to the same child without filing a gift tax return or using their lifetime exemption. This means a married couple could give a total of $36,000 (2024) or $38,000 (2025/2026) to each child annually, with each parent writing a separate check to stay within the annual exclusion, notes TurboTax, City National Bank, and SmartAsset.com.
How did the Duttons avoid the inheritance tax?
The Duttons in Yellowstone avoided massive estate taxes primarily through the strategic use of a conservation easement, a legal agreement that protects the ranch's natural state in exchange for significant tax breaks, effectively lowering the property's taxable value upon inheritance, though the series finale showed a final desperate move involving a nominal sale to Thomas Rainwater to manage immediate tax burdens. Other real-world methods they could have used include irrevocable trusts or lifetime gifting, but the easement was their main fictional strategy.
How long does 100% bonus depreciation last?
On July 4th, President Trump signed the “One Big Beautiful Bill Act” (OBBBA) into law, emphasizing a more pro-business tax environment, which is highlighted by restoring 100% bonus depreciation permanently for qualifying property placed into service after January 19, 2025.
Do I have to worry about the gift tax if I give my son $75000 toward a down payment?
No, you likely won't have to worry about paying gift tax on a $75,000 gift to your son for a down payment, as it falls below the high lifetime gift tax exemption (around $13.6 million in 2024, $13.99 million in 2025), but you will need to file IRS Form 709 to report the amount that exceeds the annual exclusion ($18,000 in 2024, $19,000 in 2025) and reduce your lifetime exemption, though your son won't pay tax, and you'll only owe tax if you exceed the lifetime limit.
What Trump tax cuts will expire in 2025?
Yes, many key individual provisions from the 2017 Tax Cuts and Jobs Act (TCJA), often called the "Trump Tax Cuts," are set to expire at the end of December 2025, reverting tax laws to pre-2017 levels, meaning millions could face tax increases, though some recent legislation, like the "One Big Beautiful Bill Act," aims to extend or modify many of these, impacting filings for 2025 and beyond.
What vehicles qualify for 100 bonus depreciation?
Vehicles qualifying for 100% bonus depreciation are primarily heavy-duty trucks, large vans, and SUVs with a Gross Vehicle Weight Rating (GVWR) over 6,000 pounds that are used more than 50% for business, with the full 100% deduction applying to assets placed in service after January 19, 2025, under the OBBB Act, allowing for immediate expensing of the entire cost, unlike luxury cars capped by IRS rules.
Will 100% bonus depreciation come back?
One Big Beautiful Bill Act
In 2025, the OBBB reinstated 100% bonus depreciation. Starting with property placed in service after Jan. 19, 2025, businesses can again deduct 100% of the cost of most qualifying property up front moving forward.
What is the 6000 pound vehicle loophole?
The 6,000-pound vehicle loophole refers to a U.S. tax code provision (Section 179) allowing businesses to deduct a large portion, or even the full cost, of vehicles with a Gross Vehicle Weight Rating (GVWR) over 6,000 pounds, like heavy SUVs, trucks, and vans, from their taxes in the first year. Originally meant for farmers and contractors, it became popular for deducting large luxury SUVs by avoiding standard depreciation caps, with current deductions potentially reaching tens of thousands of dollars through Section 179 and bonus depreciation, provided the vehicle is used more than 50% for business.
Is Section 179 going away in 2026?
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.
What are the downsides of bonus depreciation?
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.
How does 100% bonus depreciation work for rental property?
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.
What is the 2% rule for rental property?
The "2% rule" in rental property investing is a quick screening tool suggesting the gross monthly rent should be at least 2% of the property's purchase price, meaning a $100,000 property should rent for $2,000/month, helping identify potentially profitable deals with positive cash flow early on, though it's a simplified metric that doesn't account for all expenses like maintenance, taxes, or vacancies, making further analysis essential.
How will Trump's tax bill affect me?
Trump Tax Plan Changes: Standard Deduction
The 2017 Trump tax law (TCJA) nearly doubled the standard deduction for all filers, and OBBB bumped them up. If you're a single filer or if you're married filing separately, your standard deduction for 2025 rose to $15,750 under OBBBA.
How much tax do the top 1% pay?
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.
What is the bonus depreciation for 2025?
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. Lighter passenger cars and SUVs are subject to luxury auto depreciation limits, which cap the annual deduction.