100% Bonus Depreciation Is Back: What It Means for Your Next Big Business Purchase

If you’ve been putting off a new truck, a piece of equipment, or a round of computer upgrades because the tax side felt confusing, this one’s for you. Bonus depreciation is back at 100%, and for a lot of business owners that means a much bigger deduction in the year they buy. 

We know tax rules change so often it’s hard to keep up. You’re running a business. Tracking depreciation percentages probably isn’t how you want to spend a Tuesday night. 

What Is Bonus Depreciation, in Plain English? 

Bonus depreciation lets you deduct the full cost of qualifying business assets in the year you start using them. Instead of spreading the write-off over five, seven, or fifteen years, you take it all at once. 

Normally the IRS treats a big purchase like a slow drip. A $50,000 machine gets written off a little at a time, year after year. Bonus depreciation turns that drip into one bucket. 

Assets that usually qualify include: 

• Machinery and equipment 

• Business vehicles (passenger cars have yearly dollar caps, but trucks and SUVs over 6,000 pounds generally don’t) 

• Computers, servers, and off-the-shelf software 

• Office furniture and fixtures 

• Most other property with a recovery period of 20 years or less 

Buildings generally don’t qualify, although certain building improvements and qualifying production facilities can. Land doesn’t qualify.

Why Did 100% Bonus Depreciation Go Away, and Why Is It Back? 

It was set to shrink every year, and a 2025 tax law reversed that. Under the One Big Beautiful Bill Act, signed July 4, 2025, 100% bonus depreciation returned permanently for qualifying property acquired after January 19, 2025. 

Here’s the backstory. The 2017 tax law allowed 100% through 2022, then started cutting it: 80% in 2023, 60% in 2024, and 40% in 2025. It was headed to zero. 

Many business owners tell us that phase-down felt like whiplash. Some rushed purchases into 2022. Others held off, hoping Congress would step in. If you felt like you were guessing, you weren’t alone. Now that 100% is permanent, you can plan around what your business needs instead of a countdown clock. 

One detail to check: purchases under a binding contract signed before January 20, 2025, may still fall under the old phase-down schedule—generally 40% for property placed in service in 2025 or 20% in 2026. Have your tax adviser review the contract before assuming 100% applies.

How Much Could 100% Bonus Depreciation Actually Save You?

For many owners, the difference shows up as thousands of dollars in lower taxes in year one. The bigger the purchase, the bigger the gap. 

For a 2025 comparison, assume you buy a $100,000 asset used entirely for business that qualifies as five-year property, the half-year convention applies, and you don’t use Section 179. Under the old 40% bonus rule, bonus plus regular depreciation would produce a $52,000 first-year deduction, versus $100,000 under the restored rule. 

That’s $48,000 more in first-year deductions, or about $14,400 in additional federal tax savings at an assumed 30% marginal tax rate—if you can use the full deduction this year. 

Picture Dana, who runs a landscaping company with three crews. She needs a $100,000 skid steer and trailer to take on bigger commercial jobs. For Dana, those potential tax savings could make a practical difference.  It could cover a seasonal worker for a few months or give her a cushion to get through the slow winter stretch. 

The total deduction over the life of the asset is the same either way. What changes is when you get it. And money in your hands now is worth more than money three years from now. 

Should I Buy Equipment Just to Get the Tax Deduction? 

No. We’ll say it plainly: a tax deduction reduces the cost of a purchase; it doesn’t make an unnecessary purchase free. 

We’ve watched owners buy a pickup in late December to “beat the tax bill,” then scramble for cash in February when payroll and rent came due. It’s understandable. A big tax bill feels like the enemy. But cash in the bank keeps your doors open. 

Bonus depreciation works best as a reward for purchases that already make sense. Before you buy, ask yourself: 

• Would I buy this if there were no tax break? 

• Can I pay for it without draining my emergency reserve? 

• Do I expect my income to be higher next year? 

That last one matters more than people think. Since a deduction is worth more in a high-income year, sometimes it makes sense to spread it out. You’re allowed to elect out of bonus depreciation for a class of assets. 

There’s also some good news for cash flow. If you finance the purchase, you can generally still deduct the full cost in year one, even though you’re paying it off over time.

What Timing Mistakes Should I Watch For Before Year-End? 

The asset has to be placed in service, meaning set up and ready to use in your business, by December 31 to count for this year. Paying for it isn’t enough. 

Here’s how that trips people up. A bakery owner orders a $40,000 commercial oven in November. Shipping delays push delivery to January 3. Her deduction moves to next year, and the tax bill she was planning around doesn’t shrink the way she expected. 

A few other slip-ups we see often: 

• Vehicles used for both personal and business driving. You need more than 50% business use, and a mileage log to prove it. 

• State taxes. Many states don’t follow the federal bonus depreciation rules, so your state return may look different. 

• Missing records. Keep the invoice, delivery records, and evidence of when the asset was ready and available for its intended business use. 

These mistakes almost never come from carelessness. They happen because you’re stretched thin and December is already your busiest month. A short planning conversation in October or early November can prevent most of them. 

How Does Bonus Depreciation Compare With Section 179?

Both let you write off business assets fast, and many owners use them together. The right mix depends on your income, your state, and your plans for the next few years. 

Section 179 is another expensing rule. For 2026, its maximum deduction is $2.56 million, reduced when qualifying purchases exceed $4.09 million. 

Section 179 is limited by business income and lets you choose which assets to expense. Bonus depreciation can create a tax loss, although other rules may limit how much of that loss you can use this year. 

For a growing contractor buying several trucks and tools in one year, choosing between the two can change the outcome by thousands of dollars. If you’d like to read the IRS’s own explanation of how depreciation works, IRS Publication 946 is a helpful resource: https://www.irs.gov/publications/p946

How Can We Help You Plan Your Next Big Purchase Without the Stress? 

You don’t have to figure out depreciation rules, purchase timing, and state differences on your own. That’s exactly the kind of work we love to take off your plate. 

At J.R. Martin & Associates, we help you weigh purchase timing, available deductions, and cash flow before you commit. We also help organize your asset records and evaluate whether the purchase supports your business goals—not just a tax deduction. 

If you’re thinking about equipment, vehicles, or technology in the next few months, let’s talk before you buy. There’s no pressure and no obligation. Reach out to schedule a planning conversation, and let’s work together to make your next purchase a smart one.