Bonus Depreciation Is Back at 100%: What Businesses Need to Know in 2025
November 11, 2025 by Mark Tuscany, CPA, Senior Tax Manager
If your business buys equipment or is planning to upgrade a facility or purchase vehicle(s), your 2025 tax-planning should include consideration of 100% bonus depreciation.
The recent tax law reinstates full bonus depreciation—meaning qualifying property placed in service on or after January 20, 2025 can often be expensed immediately rather than spread across a depreciation schedule. For your business, this could mean valuable tax savings sooner that help fuel reinvestment and growth in the year ahead.
Specific qualifications and limitations may affect how your business benefits from these changes. Here’s an overview of the key updates and what steps your business should take next.
Overview of New Bonus Depreciation Rules
The 2025 tax law brings back full 100% bonus depreciation for qualified property, along with several clarifications that may change how businesses plan year-end purchases:
- 100% Expensing Is Back
Qualifying assets placed in service on or after January 20, 2025 can generally be written off in full in the year they’re placed in service. This reinstates the generous expensing rules that had previously phased down to 60% and 40%. It’s a major opportunity for cash-flow management and year-end planning. - Prior Phase-Down Rules Still Apply to Older Assets
Property acquired before January 20, 2025 continues under the prior schedule—40% in 2025 and 20% in 2026—so timing matters. If a purchase is near the cutoff date, the acquisition contract date will determine which rule applies. - Qualified Production Property (QPP) Introduced IRC § 168(n)
A new provision allows manufacturers and production businesses to fully expense certain factory buildings and components that are integral to their production process. Construction must begin between January 20, 2025 and December 31, 2028, with the property placed in service by December 31, 2030. - Used Property Still Qualifies—With Caveats
Businesses purchasing used equipment, vehicles, or other tangible assets may also qualify for bonus depreciation, as long as the property wasn’t previously owned by the taxpayer or a related party and meets the acquisition and basis requirements under Section 168(k). - Industry-Specific Exceptions Apply
While many tangible business assets qualify, certain property types—like general office space, lodging facilities, or parking structures—do not. Similarly, luxury autos and listed property have separate limits and business-use requirements.
Determining Eligibility for 100% Bonus Depreciation
The reinstated 100% bonus depreciation rule offers a valuable opportunity for businesses making capital investments—but not every purchase will qualify automatically. Eligibility depends on timing, business use, and property type.
- Manufacturers and Production Businesses
Qualified Production Property (QPP) may allow you to fully expense factory buildings and components directly used in production. This could reduce your taxable income immediately, instead of depreciating those costs over decades. - Real Estate and Rental Property Owners
Bonus depreciation for real estate generally applies only to specific improvements that qualify as qualified improvement property (QIP)—such as interior upgrades made to nonresidential buildings. Structural components like roofs, HVAC systems, and elevators can also qualify under certain provisions. However, general office space, administrative areas, and parking structures typically do not. Consider cost segregation studies. - Businesses Purchasing Vehicles or Equipment
While new and used equipment may qualify, luxury autos (passenger vehicles under 6,000 lbs.) and “listed property” are still subject to strict limits and business-use tests. Larger SUVs and heavy-duty trucks may offer better deduction potential.
Take Action Now: Tax Planning for Year-End 2025 and Beyond
These highlights reflect only a few of the recent changes to bonus depreciation under the Tax Cuts and Jobs Act and One Big Beautiful Bill Act. The new law includes many detailed provisions, and every business situation is different—so it’s worth reviewing the specifics with your tax advisor at Gordon Advisors to find out what your business can and cannot expense.
As 2026 approaches, our team can help you evaluate equipment purchases, construction projects, or upgrades that may qualify for bonus depreciation. Manufacturers should confirm whether new construction meets Qualified Production Property (QPP) requirements, real estate owners should assess if their property improvements qualify, while businesses investing in vehicles or equipment should ensure documentation meets business-use and luxury auto rules.
Before year-end, make sure your bonus depreciation and Section 179 strategy aligns with your 2026 tax goals. Contact Gordon Advisors to assess timing, eligibility, and the right strategy for your business.