100% Bonus Depreciation: Your Business's Golden Opportunity

The One Big Beautiful Bill Act has created an unprecedented opportunity for business owners to dramatically reduce their tax liability through the permanent restoration of 100% bonus depreciation. As a CPA who has guided countless businesses through equipment acquisition decisions, I can tell you this is a game-changer.

What Changed

Bonus depreciation had been phasing down: 80% in 2023, 60% in 2024, 40% in 2025 (under prior law). The new legislation restores 100% bonus depreciation and makes it permanent, providing long-term planning certainty.

What Qualifies

Bonus depreciation applies to tangible property with a recovery period of 20 years or less, including machinery, equipment, computers, office furniture, vehicles, and qualified improvement property. Both new and used property qualify, provided the property wasn't previously used by the taxpayer.

Strategic Applications

Equipment Purchases: Time major equipment purchases strategically. 100% first-year deduction means immediate tax benefit.

Vehicle Acquisitions: Heavy SUVs and trucks (over 6,000 lbs GVWR) can be fully expensed. A $75,000 work truck generates a $75,000 deduction.

Leasehold Improvements: Qualified improvement property (interior improvements to nonresidential buildings) qualifies for bonus depreciation, making tenant build-outs significantly more tax-efficient.

Coordination with Other Provisions

Bonus depreciation works alongside Section 179 expensing. Typically, Section 179 is applied first (subject to its limits and phase-outs), then bonus depreciation covers remaining eligible costs. This combination can fully expense substantial capital investments.

Cash Flow Considerations

While immediate expensing reduces current-year taxes, it also reduces future depreciation deductions. For businesses expecting significantly higher income in future years, spreading deductions over time might be preferable. Model both scenarios with your CPA.