The OBBBA reversed the bonus depreciation phase-out and made 100% bonus depreciation permanent for qualifying property placed in service after January 19, 2025. For capital-intensive businesses, this creates meaningful opportunities for strategic tax planning.
What Qualifies
- Tangible MACRS property with recovery period of 20 years or less
- Qualified Improvement Property (QIP) — interior improvements to commercial buildings
- Business vehicles with GVWR above 1,000 pounds
- Off-the-shelf computer software
- Qualified sound recordings (new category)
Cost Segregation for Real Estate
While bonus depreciation doesn't apply to building structures, 20-30% of a real estate purchase typically consists of components eligible for accelerated depreciation. A $5 million commercial property could yield $2 million in first-year deductions through cost segregation.
Key Advantages Over Section 179
Unlike Section 179, bonus depreciation has no income limitation and can create or increase net operating losses. These losses may be carried forward to offset future income, making it especially valuable for long-term planning.
