What is the bonus depreciation rate for 2026?

For qualifying property acquired after January 19, 2025, bonus depreciation is 100%, and the One Big Beautiful Bill made that permanent. Property acquired on or before that date still follows the old phase-down, which was 40% in 2025 and would have been 20% in 2026.

Is 100% bonus depreciation permanent now?

Yes. The One Big Beautiful Bill restored bonus depreciation to a permanent 100% under Section 168(k), rather than the temporary bonus that was phasing out to zero by 2027. It applies to property with a recovery period of 20 years or less, acquired after January 19, 2025.

What property qualifies for bonus depreciation?

Property with a MACRS recovery period of 20 years or less: machinery, equipment, vehicles, computers, furniture, and qualified improvement property. It also covers the short-life 5, 7, and 15-year property a cost segregation study carves out of a building, which is what makes those studies especially valuable again.

Bonus depreciation in 2026: back to 100%

Bonus depreciation is back to 100% for 2026. The One Big Beautiful Bill restored it to a permanent full write-off for qualifying property acquired after January 19, 2025, which means a business can expense the entire cost of equipment, machinery, and other short-life assets in the year it puts them to work, instead of deducting a slice at a time over years.

That reverses a countdown that was already running. Under the earlier rules, bonus depreciation was fading out: 80% in 2023, 60% in 2024, 40% in 2025, and it was set to drop to 20% in 2026 and vanish in 2027. Property you acquired before January 20, 2025 still follows that phase-down. Everything after it gets the full 100% again.

The cliff that stopped mid-fall

For most of a decade, bonus depreciation was a use-it-or-lose-it clock. The 2017 tax law set it at 100%, then wrote in a phase-down that clawed twenty points off every year starting in 2023. A business planning a big equipment purchase had to weigh the tax timing against a shrinking benefit, and by 2026 that benefit was down to a fifth of what it once was.

The One Big Beautiful Bill reset it, and this time without an expiration date. For property acquired after January 19, 2025, the rate is 100% and the statute makes it permanent.

Bar chart of the old bonus depreciation phase-down, 80% in 2023 falling to 0% by 2027, with a green line marking the restored permanent 100% — The grey bars are the phase-down that applied to property acquired before January 20, 2025. The green line is what the law restored for property acquired after it. *Editorial illustration, TreasuryClear.*

What 100% actually does to a purchase

Normally a business capitalizes equipment and deducts it over a set recovery period, five years for a lot of machinery, seven for other gear. Bonus depreciation lets it skip the schedule and deduct the whole cost in year one.

On $100,000 of equipment, that’s the difference between a $100,000 deduction now and roughly $14,000 this year under a straight seven-year line. The rest of the deduction doesn’t disappear either way. Bonus just pulls all of it into the first year, when it can offset income you’ve already earned.

Two bars comparing a full $100,000 first-year deduction under 100% bonus against about $14,286 under a straight-line seven-year schedule — The same $100,000 asset, first-year deduction. Bonus pulls the entire cost forward instead of spreading it across the asset's life. *Editorial illustration, TreasuryClear.*

Qualifying property is anything with a MACRS recovery period of 20 years or less. That’s a wide net: machinery, vehicles, computers, office furniture, and qualified improvement property, the interior work on a commercial building. If you can put it on the books with a life of two decades or less, it likely qualifies.

An industrial conveyor and roller system running through a plant — Production equipment is the textbook case: a five or seven-year asset that a business can now expense in full the year it goes into service. *Michael Li via Pexels. Pexels License.*

Why this makes cost segregation worth a second look

A building itself depreciates over 39 years, far too long to qualify for bonus. But a building is not one asset. A cost segregation study breaks it into parts and reclassifies the ones that really belong in 5, 7, and 15-year classes: the special-purpose wiring, the fixtures, the site work, the finishes. Those parts do qualify for bonus.

So with 100% bonus back, a study that moves 25% of a building’s basis into short-life property can turn that whole slice into a first-year deduction rather than a trickle over four decades. That’s why the restoration matters most to real estate owners: it’s what makes the cost segregation math pay again, and our calculator lets you run your own building against it.

A steel-frame commercial building under construction with a tower crane against a blue sky — Qualified improvement property, the interior build-out of a commercial building, qualifies for bonus. A cost segregation study is how the rest of the building's short-life parts get there too. *SSJF01 via Wikimedia Commons. CC0.*

The part the enthusiasm skips

A full first-year write-off is real money, and it is still a deferral, not a discount. Expensing an asset now means there’s nothing left to depreciate on it later, so future years lose that deduction. And when you sell, depreciation recapture can tax back the benefit at ordinary rates. The gain is the time value of holding that tax money in the meantime, which is large if you’ll keep the asset for years and small if you’re about to flip it.

There’s also a choice buried in the rules: you can elect a lower rate, 40% or 60%, instead of the full 100% for a tax year. That sounds strange until you have a year with little income to shelter, where a giant deduction is wasted and you’d rather spread it forward. Which way is right depends on your income, your entity, and your plans, so run the number, then take it to your CPA. This is an estimate and a summary, not tax advice. See the rest of the tax incentives section.