Can taxpayers claim 100% bonus depreciation retroactively for tax years 2023 and 2024 under the OBBBA?
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No, taxpayers cannot claim 100% bonus depreciation retroactively for tax years 2023 and 2024 under the OBBBA (One Big Beautiful Bill Act).
Legal Analysis
1. OBBBA’s Effective Date for 100% Bonus Depreciation
The OBBBA, enacted as P.L. 119-21, permanently restores 100% bonus depreciation for "qualified property" placed in service after January 19, 2025. The law specifically states that the amendments apply to property acquired after January 19, 2025, and, for certain plants, to those planted or grafted after that date. There is no provision in the OBBBA that allows for retroactive application of 100% bonus depreciation to property placed in service in 2023 or 2024.
2. Pre-OBBBA Law for 2023 and 2024
For property placed in service in 2023, the applicable bonus depreciation rate was 80%. For property placed in service in 2024, the rate was scheduled to phase down to 60% (except for certain long production period property and certain aircraft, which had an 80% rate for 2024).
3. OBBBA’s Prospective Application
The OBBBA’s restoration of 100% bonus depreciation is not retroactive. The law’s effective date is clear: it applies only to property acquired and placed in service after January 19, 2025. There is no statutory language in the OBBBA that provides for retroactive application to prior years or allows taxpayers to amend prior returns to claim 100% bonus depreciation for property placed in service in 2023 or 2024.
4. IRS Guidance and Form 4562 Instructions
The IRS instructions for Form 4562 for 2024 confirm that, for property placed in service in 2023, the bonus depreciation rate is 80%, and for 2024, it is 60% (with certain exceptions for long production period property and certain aircraft). The instructions also note that the OBBBA restores 100% bonus depreciation for property placed in service after January 19, 2025, but do not indicate any retroactive effect.
5. No Automatic or Elective Retroactive Change
There is no provision in the OBBBA or in IRS guidance that allows taxpayers to elect 100% bonus depreciation for property placed in service in 2023 or 2024. The law is forward-looking only.
6. Conclusion
Taxpayers must apply the bonus depreciation rates in effect for the year the property was placed in service: 80% for 2023 and 60% for 2024 (with certain exceptions). The OBBBA’s restoration of 100% bonus depreciation applies only to property placed in service after January 19, 2025, and does not apply retroactively to 2023 or 2024.
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