100% Bonus Depreciation Is Back—What It Means for Your Business in 2025 and Beyond

Good news for business owners: the recently signed July 2025 tax bill has brought back one of the most powerful tax-saving tools in recent memory—100% bonus depreciation. If your business plans to invest in equipment, vehicles, technology, or other qualifying property, this change could significantly impact your bottom line.

Here’s what you need to know.

What Is Bonus Depreciation?

Bonus depreciation allows businesses to immediately deduct the full cost of qualifying assets in the year they’re placed in service, rather than depreciating them over several years. It’s designed to encourage investment by giving companies a significant upfront tax benefit.

Prior to this bill, bonus depreciation was scheduled to phase out, decreasing to 40% in 2025 and disappearing entirely by 2027. But the new law reverses that phase-out and permanently reinstates 100% bonus depreciation, effective for property placed in service on or after January 19, 2025.

What Qualifies for 100% Bonus Depreciation?

Under the revised law, bonus depreciation applies to most types of new and used tangible property with a recovery period of 20 years or less. This includes:
- Equipment and machinery
- Business vehicles
- Furniture and fixtures
- Computers and software
- Leasehold improvements to commercial space

Used property qualifies as long as it wasn’t previously used by the taxpayer and meets certain acquisition requirements.

Why This Matters for You

This change presents a major opportunity to reduce your tax liability in the year of purchase. If you’re planning to expand, upgrade equipment, or invest in your operations, 100% bonus depreciation lets you take the full deduction immediately—improving cash flow and reducing taxable income.

However, keep in mind:
- Timing matters: Assets must be placed in service after January 19, 2025, to qualify for the new rule. Property placed in service before that date may still fall under the old, reduced percentage.
- It’s optional: You can elect out of bonus depreciation on a class-by-class basis if spreading out deductions works better for your situation.

Next Steps

Not sure how to take advantage of this provision?  A well-planned investment strategy can help you make the most of this tax break and support your long-term growth goals.

Need help evaluating whether your planned purchases qualify for 100% bonus depreciation? We’re here to guide you through it—reach out anytime.