What qualifies for 100% bonus depreciation in 2025?
Asked by: Prof. Tyrese Hill MD | Last update: February 7, 2026Score: 4.9/5 (13 votes)
For 2025, 100% bonus depreciation applies to qualified tangible property, including MACRS property with a recovery period of 20 years or less (like computers, machinery, furniture, vehicles, qualified improvement property), certain software, water utility property, and film/TV/theatrical productions, provided the property is acquired and placed in service after January 19, 2025, with its original use starting with the taxpayer or meeting used property rules, thanks to the permanent reinstatement by the One Big Beautiful Bill Act (OBBBA).
Can you take 100% bonus depreciation in 2025?
Yes, 100% bonus depreciation did return permanently starting January 20, 2025, due to the One, Big, Beautiful Bill (OBBB) Act, which reversed the planned phase-down and reinstated it for eligible property acquired and placed in service after that date, offering significant tax incentives for businesses.
What can you take 100% bonus depreciation on?
100% bonus depreciation qualifies tangible business property with a MACRS recovery period of 20 years or less, like machinery, computers, furniture, vehicles, and certain building improvements (Qualified Improvement Property), if acquired and placed in service after January 19, 2025, under recent legislation (OBBB). Key examples include new or used equipment, software, qualified film/TV/theater productions, and some water utility property, with rules applying to both new and used assets as long as the original use starts with the taxpayer.
Is Trump going to reinstate 100% bonus depreciation?
Property owners and investors should pay attention here. 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.
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.
100% Bonus Depreciation Is Back! Here’s How to Use It
Is 100% bonus back for 2025?
Yes, 100% bonus depreciation did return permanently starting January 20, 2025, due to the One, Big, Beautiful Bill (OBBB) Act, which reversed the planned phase-down and reinstated it for eligible property acquired and placed in service after that date, offering significant tax incentives for businesses.
How to calculate 100% bonus depreciation?
How do you calculate bonus depreciation? To calculate bonus depreciation, you need to multiply the bonus depreciation rate — currently 100% — by the cost of the business asset. This amount is then deducted from the business's income.
Did 100% bonus depreciation pass?
Business owners got their wish in 2025 when Congress made 100% bonus depreciation permanent. The provision, which was initially part of the 2017 Tax Cuts and Jobs Act (TCJA), began to phase out in 2023. However, the One Big Beautiful Bill Act (OBBBA) permanently reinstated the deduction for qualifying property.
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 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 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.
Can you write off 100% of a 6000 lb vehicle?
Yes, you can often write off 100% of a vehicle with a Gross Vehicle Weight Rating (GVWR) over 6,000 lbs in the first year using Section 179 Deduction and/or Bonus Depreciation, bypassing typical luxury auto limits, for qualifying business use, but your vehicle needs to meet the weight criteria (not just its unloaded weight) and you must meet business use tests. Vehicles like heavy-duty trucks (Ford F-250/350, Ram 2500/3500) and some large cargo vans often qualify, allowing for significant immediate expensing, but always verify the specific GVWR of the exact model you purchase.
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 assets are eligible for 100% bonus depreciation?
100% bonus depreciation qualifies for new or used tangible business assets with a MACRS recovery period of 20 years or less, like machinery, equipment, vehicles, office furniture, and software, provided they are acquired and placed in service after January 19, 2025, under the new One Big Beautiful Bill (OBBB) Act, allowing for immediate expensing of costs, though some items like luxury autos and certain real estate components have restrictions.
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 under the high lifetime gift tax exemption (over $13 million), but you will need to file IRS Form 709 to report the gift because it exceeds the annual exclusion ($18,000 in 2024, $19,000 in 2025) and will reduce your lifetime exemption, as noted by SmartAsset.com and Loan Pronto https://rjfesq.com/blog/do-i-have-to-worry-about-the-gift-tax-if-i-give-my-son-75000-toward-a-down-payment, https://smartasset.com/taxes/gift-tax-give-son-75k-for-down-payment,.
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.
Will Trump bring back 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.
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 are the key changes to expect in 2025 taxes?
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.
Is there 100% bonus depreciation in 2025?
Yes, 100% bonus depreciation did return permanently starting January 20, 2025, due to the One, Big, Beautiful Bill (OBBB) Act, which reversed the planned phase-down and reinstated it for eligible property acquired and placed in service after that date, offering significant tax incentives for businesses.
Why does my bonus get taxed 40%?
Here's the truth: bonuses aren't actually taxed at 40%. The federal flat rate for bonus pay is 22% for supplemental income under $1 million. Add Social Security (6.2%), Medicare (1.45%), and state taxes, and you're looking at roughly 30-35% total withholding.
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.
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.
Is Airbnb 100 bonus depreciation 2025?
The One Big Beautiful Bill Act (OBBA) restored 100% bonus depreciation in 2025, letting Airbnb hosts and short-term rental owners fully deduct qualifying asset costs. Properties that qualify as businesses may use the short-term rental tax loophole to apply bonus depreciation beyond rental income.
What is the $2500 expense rule?
The $2,500 expense rule refers to the IRS's De Minimis Safe Harbor Election, allowing businesses (without a formal financial statement) to immediately deduct the full cost of tangible property costing up to $2,500 per item or invoice, rather than depreciating it over years. This simplifies taxes for small businesses, letting them expense items like computers or small furniture in one year if they follow consistent accounting practices and make the annual election by attaching a statement to their tax return.