Is 100% bonus depreciation back for 2025 and 2026?
Yes. The One Big Beautiful Bill Act made 100% bonus depreciation under IRC §168(k) permanent for qualified property acquired and placed in service after January 19, 2025. Property acquired before January 20, 2025 still follows the old phase-down: 40% if placed in service in 2025 and 20% in 2026.
Sources checked . Current through .
Which rate applies
The acquisition date decides it. Notice 2026-11 says taxpayers apply rules consistent with Treas. Reg. §1.168(k)-2(b)(5), substituting "January 19, 2025" for "September 27, 2017", to decide whether property was acquired after January 19, 2025.
| Property acquired | Placed in service | Bonus rate |
|---|---|---|
| After January 19, 2025 | Any time after that | 100% |
| After September 27, 2017 and before January 20, 2025 | 2025 | 40% (60% for long production period property and certain aircraft) |
| After September 27, 2017 and before January 20, 2025 | 2026 | 20% |
The law also removed the old requirement that qualified property be placed in service before January 1, 2027, for property acquired after January 19, 2025.
What counts as qualified property
The Form 4562 instructions list:
- tangible property depreciated under MACRS with a recovery period of 20 years or less
- computer software defined in and depreciated under IRC §167(f)(1)
- water utility property
- qualified film, television and live theatrical productions
Elections
- Taking 40% instead of 100%: For property acquired after January 19, 2025, a taxpayer can elect a 40% allowance (60% for long production period property and certain aircraft) in the first tax year ending after January 19, 2025. This is the new IRC §168(k)(10) election.
- Electing out: IRC §168(k)(7) still lets a taxpayer elect not to take bonus depreciation for any class of property placed in service during the year. Treas. Reg. §1.168(k)-2(f)(1) says the election is made as Form 4562 and its instructions prescribe. It applies to a whole class of property, not asset by asset.
Sources
- Notice 2026-11, §2.02: Interim guidance on the 100% additional first year depreciation deduction (2026-06 IRB)
- Rev. Proc. 2026-15, §2: Depreciation limits for passenger automobiles (2026-13 IRB)
- Instructions for Form 4562 (2025): Depreciation and Amortization
Not tax advice. Check the sources against your client's facts before relying on this.