Tax Planning
How Digital Nomads Can Leverage the U.S. 100% First-Year Depreciation Rule
The One, Big, Beautiful Bill allows eligible property purchases to be fully depreciated in the first year—here’s how digital nomads operating businesses abroad can use it to their advantage.
By NomadicTax Research Team • 5-8 min read • May 12, 2026
## What is the 100% First‐Year Depreciation Deduction?
As part of the One, Big, Beautiful Bill (OBBB), the U.S. tax code now provides for a **100% additional first-year depreciation deduction** on eligible depreciable property acquired after **January 19, 2025**. This provision is **permanent**, and also covers certain sound recording productions. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-the-additional-first-year-depreciation-deduction-amended-as-part-of-the-one-big-beautiful-bill?utm_source=openai))
## Who Qualifies—Especially for Digital Nomads?
Digital nomads often have structures that cross borders and use physical equipment—laptops, cameras, servers, etc. To qualify:
- The property must be **used in a qualified business activity** (manufacturing, agriculture, refining, etc.) OR be property “placed in service” after the acquisition date. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-the-additional-first-year-depreciation-deduction-amended-as-part-of-the-one-big-beautiful-bill?utm_source=openai))
- Sound recording productions starting after July 4, 2025 are eligible. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-the-additional-first-year-depreciation-deduction-amended-as-part-of-the-one-big-beautiful-bill?utm_source=openai))
- If a nomad runs a production or service business that involves qualified production property, those assets can be fully written off in year one. |
## How This Helps Digital Nomads Abroad
| **Challenge** | **How 100% Depreciation Helps** |
|----------------|--------------------------------------|
| Buying expensive equipment abroad | Full deduction eases cash-flow by reducing taxable income immediately. |
| Fluctuating income periods | Apply large deduction in year of purchase to offset profit peaks. |
| Managing IRS compliance remotely | Having receiver or agent in U.S. to handle "placed in service" docs, dates, use, helps prove eligibility. |
## Key Steps to Ensure Eligibility & Compliance
1. **Document acquisition and service dates** precisely—shipping date, installation, activation of equipment.
2. **Define business use**—if part personal, prorate deduction accordingly.
3. Keep detailed records—photos, invoices, shipping, contracts to show equipment is used in qualified production activity.
4. For sound recordings: establish when the principal recording commenced and record initial release or broadcast dates. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-the-additional-first-year-depreciation-deduction-amended-as-part-of-the-one-big-beautiful-bill?utm_source=openai))
## Practical Example
**Example**: Emma is a nomadic videographer. In August 2025, she buys a high-end camera, computer editing rig, and sound equipment to produce documentary films (a qualified production activity). She ships them to her base in Spain. All equipment is “placed in service” when first used for business (editing and posting first film). She may take **100% deduction** of their cost in 2026 on her U.S. tax return. If she later uses some of it personally, she reduces or recaptures depreciation accordingly.
## Caveats & Considerations
- U.S. source income or effectively connected income may still be taxable—offsetting with full depreciation doesn’t eliminate U.S. filing obligations.
- Property that ceases to qualify later must be adjusted, recapture applies. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-special-depreciation-allowance-for-qualified-production-property-announce-upcoming-proposed-regulations-under-the-one-big-beautiful-bill?utm_source=openai))
- Remember the deadline: acquisitions must be after **Jan 19, 2025**. Equipment bought earlier doesn’t qualify. |
**Bottom Line**: Digital nomads who invest in eligible business property—technology, production gear—can benefit enormously from the 100% first‐year depreciation. With proper planning and documentation, it’s a powerful tax planning tool to accelerate deductions and improve cash flow.