What’s Changed Under the Current US Depreciation Rules
The One, Big, Beautiful Bill Act (OBBBA), signed July 4, 2025, brought sweeping changes to depreciation rules in the U.S. Notably, Section 70301 made the 100% additional first-year depreciation deduction permanent for most qualified property acquired and placed into service after January 19, 2025. This replaces earlier phasedown percentages. (irs.gov)
An amendment to Section 168(k) via OBBBA § 70434(g) also added qualified sound recording productions to property eligible for bonus depreciation, which includes productions commencing in tax years ending after July 4, 2025. (irs.gov)
Compliance Steps & Best Practices
To ensure you can safely take advantage of these deductions:
- Document acquisition and service dates carefully—assets must be acquired and placed in service after Jan. 19, 2025 to qualify under the new permanent rule.
- Identify qualified sound recording productions—recordings must commence in taxable years ending after July 4, 2025. Details include initial release or broadcast events triggering the 'placed in service' date.
- Elect appropriately under §§ 168(k)(5) or 168(k)(10) when relevant—some property or plants may need taxpayer election.
- Prepare for forthcoming proposed regulations—IRS notice 2026-11 provides interim guidance but final regulations may adjust definitions and elections. Rely on current guidance only until new rules come out. (irs.gov)
Example: Small Recording Studio Setup
Maria runs a small recording studio producing indie albums. In August 2025 she acquired equipment and recorded albums (release in May 2026). Under the new rules she may claim the full cost of both the equipment and the sound recording production in the first year—as long as she meets the qualifying dates. Previously, only phased-in percentages or limitations might have applied.
Key Risks to Watch
- Mis-dating qualification events (acquisition, service, release).
- Failing to make required elections for certain categories.
- Assigning non-qualified property accidentally (e.g. mixed use property).
- Changes in future regulations—stay current with IRS for finalized definitions.
Actionable Advice
- Inventory all capital assets and sound recording projects—confirm eligibility.
- Mark critical dates in your accounting system—acquisition, placed in service, release.
- Engage tax counsel or CPA familiar with OBBBA changes before making large purchases.
Because the rules are now permanent, qualifying assets give businesses immediate write-offs—avoiding depreciation over several years and improving cash flow significantly.