The One Big Beautiful Bill Act (OBBBA) greatly expanded your ability to claim big first-year depreciation deductions for eligible business assets.
Here’s what you need to know, along with some advice on which type of first-year depreciation will do the most tax-saving good.
100 Percent First-Year Bonus Depreciation Is Back
The OBBBA restored 100 percent first-year bonus depreciation for eligible assets acquired and placed in service after January 19, 2025.
Before the OBBBA, 100 percent first-year bonus depreciation was last allowed for eligible assets placed in service in 2022, but the deduction percentage was generally reduced to 80 percent for 2023, 60 percent for 2024, and 40 percent for eligible assets placed in service between January 1, 2025, and January 19, 2025.
Eligible assets for 100 percent first-year bonus depreciation include most depreciable personal property such as equipment, computer hardware and peripherals, certain vehicles, and commercially available software.
Bonus depreciation can also be claimed for real estate qualified improvement property (QIP). QIP is defined as an improvement to an interior portion of a non-residential building placed in service after the date the building was placed in service. But expenditures attributable to the enlargement of a building, elevators or escalators, or the internal structural framework of a building don’t count as QIP and usually must be depreciated over 39 years.
Note. For property eligible for first-year bonus depreciation that’s placed in service during the first taxable year ending ... Log in to view full article.
