The short answer: Starting with the One Big Beautiful Act, 100% bonus depreciation is permanent. When you buy qualifying business assets — equipment, machinery, software, certain improvements — you can write off the full cost in the year you place it in service, rather than spreading the deduction over 5, 7, or 15 years. This is one of the most valuable provisions for capital-intensive businesses.
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When you buy business equipment, the IRS normally says you can't deduct the full cost immediately — you have to deduct it over the useful life of the asset, which might be 5 years for computers, 7 years for equipment, or 15 years for land improvements. This is depreciation — spreading the deduction over multiple years.
Bonus depreciation lets you accelerate that deduction and take it all in year one. For a $100,000 piece of equipment, bonus depreciation means a $100,000 deduction this year instead of roughly $14,000–$20,000 per year for 5–7 years. That's a massive cash flow difference, especially for businesses that are growing and investing in equipment.
"Before the 2008 financial collapse, you couldn't write off equipment all at once — you had to depreciate it over many years. Then they gave us 100% bonus depreciation to stimulate the economy. But then they got nervous and started phasing it back down — 80%, then 60%, then 40%. Congress kept patching it back up. Now the One Big Beautiful Act makes 100% bonus depreciation permanent. If you buy equipment, improvements, or software, you can write it all off using bonus depreciation."
⚠ The asset must be in service by December 31 of the tax year. Ordering equipment that hasn't arrived or been set up by year-end doesn't qualify. A machine still in a box in your warehouse on December 31 doesn't count. This distinction matters enormously for year-end planning.
Both bonus depreciation and Section 179 let you deduct the full cost of qualifying assets immediately. They're often used together. Key differences:
ⓘ Year-end tax planning tip from Romeo's newsletter: If you're going to buy equipment anyway, buy it before December 31 and make sure it's in service. The deduction difference between buying December 30 and January 2 is the full cost of the asset — essentially paying this year's taxes to the government for something you could have deducted immediately.
Romeo helps business owners time purchases to maximize depreciation deductions — and explains the vehicle limits, state non-conformity issues, and recapture rules that can trip people up.
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