The One Big Beautiful Bill Act, passed in 2025, brought back 100 percent bonus depreciation for many common business asset purchases. That means certain qualifying property can be fully deducted in the year it is put to work in your business, instead of being written off over several years.
The key timing detail is this. To get the 100 percent rate, the property generally must be both acquired and placed in service after Jan. 19, 2025. Placed in service usually means it is ready and available for use, not just ordered or delivered.
This change matters most if you are planning real spend on equipment and build out. Think machinery, computers, furniture, and certain improvements to nonresidential interior space that may qualify as qualified improvement property. The IRS and Treasury have also issued guidance as the rules are implemented, which is helpful if you are making purchases that straddle the cutoff dates. See the IRS guidance on the updated bonus depreciation rules.
For owners, the practical upside is cash flow. A full immediate deduction can reduce taxable income for the year, which can affect estimated tax payments and free up cash for hiring, inventory, or marketing, depending on your margins and growth plan.
If you bought assets earlier in 2025, watch the transition rules. Property acquired before Jan. 20, 2025 and placed in service during 2025 may be limited to the lower bonus depreciation percentage that was already scheduled under prior law. Iowa State’s Center for Agricultural Law and Taxation summarizes these timing cutoffs and filing season implications in its bonus depreciation update.
Used equipment can qualify, but not in every situation. The asset generally cannot have been previously used by you or a predecessor, and related party purchases can be disallowed, so document seller relationships and prior use carefully.
One more planning lever is elections. In some cases, taxpayers can elect a reduced bonus depreciation rate instead of 100 percent for the first tax year ending after Jan. 19, 2025, which can matter if you are trying to avoid creating losses or preserve the value of credits that depend on taxable income.
If you are considering a large 2026 purchase, ask your CPA to model scenarios with bonus depreciation versus Section 179, and confirm whether your state conforms to the federal rules since state tax treatment can differ.
