1.Is 100% bonus depreciation still available in 2025 and beyond?
Yes. One Beautiful Bill restored 100% bonus depreciation for qualifying property placed in service after January 19, 2025. Under prior law (TCJA), bonus depreciation was phasing down at 20% per year (80% in 2023, 60% in 2024, 40% in 2025). The legislation reverses this phase-down and restores 100% expensing under current law.
2.What property qualifies for 100% bonus depreciation?
Qualifying property includes: tangible personal property with a MACRS recovery period of 20 years or less (5-year, 7-year, 15-year classes), certain film, television, and theatrical productions, computer software, and qualified improvement property (QIP—interior improvements to nonresidential buildings). The property must be new or used (used property became eligible under TCJA) and meet the original use or acquisition requirements under §168(k)(2).
3.Can bonus depreciation create a loss, and can that loss be used?
Yes, bonus depreciation can create or increase a net operating loss (NOL). Under current law, NOLs can be carried forward indefinitely and used to offset up to 80% of taxable income in future years (§172). For real estate professionals (REPS) who have unlocked the passive activity exception, the loss offsets ordinary income in the current year. For other passive investors, the loss is suspended until offset by passive income or on disposition.
4.How does bonus depreciation interact with the §179 expensing election?
Both §179 (dollar-amount cap, currently $1.22M in 2024) and §168(k) bonus depreciation allow immediate expensing, but they operate differently. §179 is limited by taxable income from active business (cannot create a loss), applies only to business property, and must be elected. Bonus depreciation has no dollar cap, can create a loss, applies more broadly, and applies automatically unless the taxpayer affirmatively elects out. For large real estate acquisitions, bonus depreciation is almost always superior.
5.Does bonus depreciation apply to real property directly?
Not directly to the building structure (39-year or 27.5-year property)—that does not qualify for bonus depreciation. However, components reclassified through a cost segregation study into 5-, 7-, or 15-year property do qualify. Additionally, Qualified Improvement Property (QIP)—interior non-structural improvements to nonresidential buildings—is 15-year property and qualifies for 100% bonus depreciation.