100 % Bonus Depreciation Restored

100% Bonus Depreciation Restored

July 22, 2025

Generally, taxpayers are required to capitalize the cost of property acquired for use in a trade or business. That cost is then recovered over time through annual depreciation deductions, based on percentages specified in the Internal Revenue Code, until the full acquisition cost has been expensed.

Since 2002, the tax code has allowed taxpayers to claim special depreciation – commonly known as bonus depreciation – on certain types of property, including most machinery, furniture, and equipment. Bonus depreciation is taken in the year the property is placed in service. The allowable percentage has varied over the years, ranging from as low as 30% to as high as 100%. After applying bonus depreciation, taxpayers claim regular depreciation on the remaining cost of the asset, spread over its applicable recovery period (typically 3, 5, 7, or 15 years).

The One Big Beautiful Bill Act (OBBBA) restores 100% bonus depreciation for qualified property purchased after January 19, 2025. The table below compares the updated bonus depreciation percentage under the OBBBA with the scheduled phase-down that would have applied without the bill’s passage.

In addition to restoring 100% bonus depreciation for short-lived property, the OBBBA introduces a temporary 100% bonus depreciation provision specifically for qualified production property. For more details on this provision, please see the article linked below.

100% Bonus Depreciation on Qualified Production Property