Tax Planning
How the One, Big, Beautiful Bill Changes Bonus Depreciation Forever
Businesses can now take *100% bonus depreciation* on eligible property acquired after January 19, 2025—this article breaks down qualifications, elections, and strategies to maximize this powerful write-off.
By NomadicTax Research Team • 5-8 min read • March 26, 2026
## What’s New: Permanent 100% Bonus Depreciation
The One, Big, Beautiful Bill (OBBB Act) has replaced the phased-down bonus depreciation schedule with a **permanent 100% additional first-year depreciation deduction** for *qualified property* acquired *after January 19, 2025*. ([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)) Property previously subject to partial depreciation rates must now meet new eligibility rules under section 168(k). ([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))
## What Qualifies as ‘Qualified Property’?
- Business, trade, or income-producing property placed in service after Jan. 19, 2025. ([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))
- Specified plants planted or grafted after that 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))
- Used property may qualify if it satisfies certain original use and other requirements. ([irs.gov](https://www.irs.gov/newsroom/additional-first-year-depreciation-deduction-bonus-faq?utm_source=openai))
- Qualified sound recording productions begin in taxable years ending after July 4, 2025, are now 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))
## Elections and Alternatives
OBBB provides flexibility: taxpayers may **elect out** of 100% depreciation in some cases.
- They can choose **40% (or 60% for longer-lived property/aircraft)** for property placed in service during the first taxable year ending after January 19, 2025. ([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 producers can opt out of bonus depreciation under § 168(k)(7). ([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))
- Self-constructed property components and specified plants each have separate election rules. ([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai))
## Depreciation Recapture and Changes in Use
- If property designated as *qualified production property* stops being used as such, there's **depreciation recapture**: its basis gets adjusted and gains may be treated as ordinary income. ([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))
- Intermediate guidance exists until final regulations are issued; taxpayers may rely in good faith on interim guidance provided in Notice 2026-16. ([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))
## Real-World Scenarios: How Businesses Can Benefit
| Business Type | Example | Key Takeaway |
|---------------|---------|---------------|
| Manufacturer acquiring machines | Acquires new machining equipment in March 2026; can expense full cost immediately instead of depreciating over years |
| Film studio producing a sound recording released in 2025 | Investment becomes eligible for bonus depreciation; important to track commencement vs. release dates |
| Agricultural business planting new fruit trees | Specified plants planted after Jan. 19, 2025, are eligible—opt to deduct rather than capitalize |
## Actionable Insights
- **Review current and upcoming acquisitions** to ensure they qualify for 100% depreciation.
- **Decide early whether to make elective opt-outs** to lower % if beneficial for tax planning or to smooth out income.
- **Document sound recording production start dates and release dates** to ensure eligibility.
- **Consult with your CPA or tax counsel** before making changes, especially for property going out of qualified use or for tax-sensitive entities.
OBBB’s permanent 100% bonus depreciation can deliver major tax savings in the year assets are placed in service. Proper qualification and timely elections are essential to make the most of it.