The short version
For qualified property acquired and placed in service after January 19, 2025, your business can deduct 100% of the cost in the first year instead of spreading it over time. The One Big Beautiful Bill Act made this permanent, so equipment, machinery, vehicles, technology, and qualifying property bought in 2026 can be fully expensed the year they go into service. The catch is in the timing and the planning: acquisition date, placed-in-service date, and your state’s rules all affect the result.
100% bonus depreciation is back, and this time it is permanent. For qualified property your business acquires and places in service after January 19, 2025, you can deduct the entire cost in year one rather than depreciating it across five, seven, or more years. The change comes from the One Big Beautiful Bill Act, and for a business planning a meaningful purchase, it can turn into a large first-year deduction and a noticeable cash-flow shift.
At LUCA, we work with small businesses on bookkeeping, tax compliance, and the strategic side of big spending decisions through our CFO advisory work, and bonus depreciation is one of the few areas where getting the timing of a single purchase right can move your tax bill in a real way.
When a business buys equipment or property, it normally recovers the cost slowly through depreciation, deducting a portion each year over the asset’s useful life. Bonus depreciation lets you accelerate that and deduct a large share upfront. The benefit had been phasing out, dropping to 40% for 2025 and scheduled to reach zero by 2027.
The One Big Beautiful Bill Act reversed that path. It restored the deduction to 100% and made it a permanent part of the code for qualified property acquired and placed in service after January 19, 2025, a change the IRS confirmed in Notice 2026-11. Permanence is the underrated part, because it lets you plan multi-year purchases with confidence instead of racing a sunset date. The full text of the law sits in H.R. 1.
Bonus depreciation generally applies to tangible property with a recovery period of 20 years or less. In practice, that covers a lot of what a growing business buys:
Used property can qualify too, as long as it is new to your business. Alongside bonus depreciation, the Act also raised the Section 179 expensing limit to $2.5 million with a higher $4 million phaseout, giving smaller businesses another way to write off purchases immediately. The rules around business vehicle deductions are a good example of where the details matter.
A building itself does not qualify for bonus depreciation, because its recovery period is far longer than 20 years. A cost segregation study is how businesses get around that wall. The study breaks a building into its components, things like lighting, flooring, cabinetry, and land improvements, and reclassifies the shorter-lived pieces into categories that do qualify for 100% bonus depreciation.
With the deduction back at 100%, a cost segregation study on a building purchase or a renovation can free up a substantial first-year deduction that would otherwise take decades to recover. These studies are specialized work. LUCA works with cost segregation partners such as McGuire Sponsel and can point clients in the right direction when a property purchase makes one worth exploring.
This is where bonus depreciation rewards a little discipline. LUCA’s advisors flag that both the acquisition date and the placed-in-service date matter: property under a written binding contract dated before January 20, 2025 can be treated as acquired too early to qualify, even if you receive it later. Do not assume an asset qualifies; confirm the dates.
A few planning points worth weighing before a large purchase:
Each of those interacts with the rest of your financial picture, from your budget to your reported profit. A large bonus deduction can also swing the timing of estimated taxes and the cash you keep on hand.
Before you sign for a major piece of equipment or a building in 2026, it is worth running the numbers on what full expensing does to your tax bill and your cash position that year, and confirming the asset actually qualifies. That kind of forward modeling is exactly what our reporting and advisory work is built for. This article is general information, not tax advice for your specific situation.
Can I write off a work truck I buy in 2026?
Often, yes. Vehicles with a recovery period of 20 years or less can qualify for bonus depreciation, but passenger automobiles are subject to separate annual luxury-auto caps. Heavier work vehicles and trucks generally have more room. The details depend on the vehicle and how you use it.
Does my state let me take 100% bonus depreciation too?
Not always. Many states decouple from the federal bonus depreciation rules, which means you might take the full deduction federally but a smaller one on your state return. Some of those states allow Section 179 instead, so the mix matters.
What is the difference between bonus depreciation and Section 179?
Both let you deduct the cost of qualifying property upfront. Section 179 lets you pick a set dollar amount but is limited to your taxable income, while bonus depreciation applies by asset class and can push your business into a loss. Many businesses use them together.
I am buying a building. Can I bonus-depreciate it?
Not the building itself, but a cost segregation study can identify components inside it that do qualify for 100% bonus depreciation. For a larger purchase or renovation, that study can be well worth the cost.
Do I have to take bonus depreciation?
No. You can elect out by class of property, which sometimes makes sense if you would rather spread deductions into future, higher-income years. It is a planning choice, not an automatic one.
