100% Bonus Depreciation Returns

As the One Big Beautiful Bill Act was signed into law, a sweeping number of changes were made to help businesses. The most notable change is the permanent return of 100% bonus depreciation for qualifying property placed into service after January 19, 2025. 

What is bonus depreciation and qualified property? 

Bonus depreciation is an additional first-year depreciation deduction. It is a tax mechanism that allows a business to immediately deduct a large percentage of the purchase price of eligible assets, such as machinery, rather than write them off evenly over their useful life as in traditional depreciation. 

Qualifying property includes property used in a trade or business or for the production of income and falls within any of the following categories: 

• Is MACRS property that has a recovery period of 20 years or less. 
• Qualified improvement property. This includes improvements made to the interior of commercial (“nonresidential”) property after the property was initially placed in service for tax purposes by any taxpayer. 
• Computer software. 
• Qualified films, television shows, and live theatrical productions.

It is important to note that if a business was under contract to make a purchase before January 19, 2025, but closed after January 19, 2025, the assets are only eligible for 40% bonus depreciation. 

Permanent 100% bonus depreciation allows businesses to immediately deduct the cost of qualifying property such as furniture, production equipment or land improvements in the year assets are placed into service. Please reach out to a member of your Pease Bell team with any questions about the OBBBA.