How much bonus depreciation can be claimed for property placed in service according to the 2025 tax law changes?
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For property placed in service in 2025, the amount of bonus depreciation that can be claimed depends on the date the property is acquired and placed in service, due to significant changes made by the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) and amendments to IRC §168(k):
1. Property Acquired and Placed in Service Before January 20, 2025
- Bonus depreciation is 40% for most qualified property (i.e., property with a MACRS recovery period of 20 years or less, certain computer software, water utility property, and qualified film, television, and live theatrical productions) acquired after September 27, 2017, and placed in service after December 31, 2024, and before January 1, 2026.
- For certain long production period property and certain aircraft, the bonus depreciation rate is 60% for property placed in service after December 31, 2024, and before January 1, 2026.
2. Property Acquired After January 19, 2025, and Placed in Service in 2025 or Later
- Bonus depreciation is restored to 100% for qualified property acquired after January 19, 2025, and placed in service in 2025 or later.
- This change is made permanent by the OBBBA, which amends IRC §168(k) to allow full expensing (100% bonus depreciation) for qualified property acquired after January 19, 2025.
3. Special Rules and Transitional Provisions
- If property is acquired under a binding contract entered into before January 20, 2025, the original phase-down schedule applies (i.e., 40% in 2025, 20% in 2026, 0% in 2027 and after) even if placed in service after January 19, 2025.
- The 100% bonus depreciation rate applies only to property acquired after January 19, 2025.
4. Summary Table
5. Other Key Points
- Bonus depreciation applies after any Section 179 expensing and before regular MACRS depreciation.
- Taxpayers may elect out of bonus depreciation for any class of property.
- Bonus depreciation is not available for property required to be depreciated under the Alternative Depreciation System (ADS), property used less than 50% for business, or property acquired from related parties or by gift/inheritance.
In summary: For property acquired and placed in service before January 20, 2025, the bonus depreciation rate is 40% (or 60% for certain long production period property and aircraft).- For property acquired after January 19, 2025, and placed in service in 2025 or later, the bonus depreciation rate is 100% and is made permanent for qualified property.
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