Bonus Depreciation 2025: What the Big Beautiful Bill Restores

Are you tired of watching the IRS take a massive chunk of your income every year? What if you could turn those taxes into cash flow you actually keep?

Thanks to bonus depreciation 2025, that’s no longer a dream—it’s a reality.

The new One Big Beautiful Bill Act, promoted by President Trump, permanently restores full bonus depreciation. That means no more phase-downs, no more shrinking benefits, and no more guessing games.

High-income earners, business owners, and property owners across the United States can now count on powerful, permanent deductions that fuel growth and lower taxes.

In this article, we’ll break down exactly what bonus depreciation is, what the new law restores, and how you can use it as a long-term tax strategy to boost wealth and reduce your tax liability.

Rather watch than read? Check out this video:

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What Is Bonus Depreciation 2025?

Bonus depreciation is a special rule in the tax code that lets you deduct the full purchase price of certain qualified property in the first year it’s placed in service. Normally, assets like machinery, computers, or improvements to commercial buildings would be written off slowly over a long recovery period.

With bonus depreciation 2025, that recovery period disappears. You get full expensing right away.

So instead of spreading deductions over decades, you can cut your taxable income immediately, free up cash flow, and reinvest back into your business or portfolio.

How Bonus Depreciation Works

At its core, bonus depreciation rules are about timing. The Internal Revenue Service (IRS) allows you to accelerate the deduction of certain depreciable assets instead of waiting years to write them off.

Here’s how it works:

• Qualified property includes tangible personal property with a useful life of 20 years or less—think office equipment, vehicles, computers, or certain qualified production property.

• Qualified improvement property, meaning upgrades to the interior of nonresidential real property, also qualifies.

• Both new and certain used eligible property can qualify, as long as it meets the original use requirement or you are the first to put it into business use.

• You must meet the placed-in-service dates, meaning the property must be up and running in your business in the tax year you want to deduct it.

The IRS bases this system on the internal revenue code section 168, which sets out the purposes of bonus depreciation and how it applies.

Trump’s One Big Beautiful Bill Act

Under the Jobs Act of 2017, businesses and investors enjoyed 100 percent bonus depreciation, but only temporarily. Starting in 2023, the deduction began phasing down—80% in 2023, 60% in 2024, and scheduled to drop further in future years.

Enter the One Big Beautiful Bill Act (OBBBA) of 2025. This new law reverses the scheduled reductions and restores full deduction permanently. In other words, the bonus depreciation set is no longer shrinking—it’s here to stay.

This is a significant change. Instead of scrambling to make purchases before deadlines or watching benefits disappear, business leaders, property owners, and real estate investors now have long-term certainty.

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Key Benefits of Bonus Depreciation 2025

Making bonus depreciation allowances permanent creates substantial benefits for anyone with business income or capital investments:

#1. Immediate Tax Savings
Deduct the full purchase price of qualified assets in the first year, lowering your tax liability.

#2. Boosted Cash Flow
By keeping more money up front, you increase cash flow that can be reinvested into new equipment, real estate investments, or other tax strategies.

#3. Encourages Capital Expenditures
Businesses no longer hesitate to make large capital investments like equipment purchases, technology, or property improvements.

#4. Permanent Tax Strategy
Because bonus depreciation 2025 is now permanent, you don’t need to rush purchases before a phase-out date. This makes tax planning more predictable and effective.

Qualified Property and Eligibility

The Internal Revenue Service defines which types of property qualify. Common categories include:

• Equipment purchases like machinery, vehicles, or computers.

• Qualified improvement property such as interior upgrades to commercial properties.

• Qualified production property used in manufacturing or domestic production.

• Certain agricultural production equipment.

• Some used property, as long as it meets the original use requirement with you as the owner.

What doesn’t qualify? Land, goodwill, and portion of nonresidential real property like exterior structural improvements. These must follow standard cost recovery schedules.

Real-World Example: RV Park Case Study

Let’s put this into perspective with a real estate investment example.

Suppose you buy a $2.5 million RV park. For tax purposes, about 70% ($1.75 million) counts as depreciable improvements, while 30% ($750,000) is land (not depreciable).

Normally, you’d deduct $1.75 million over 27.5 years—just $64,000 per year. But with bonus depreciation 2025, you can use a cost segregation study to break the property into faster-depreciating components—roads, bathhouses, hookups, landscaping, even dog parks.

That study could unlock $500,000 in first-year deductions. The difference is enormous. Instead of waiting decades, you cut your taxable income now, keep more cash flow, and reinvest sooner.

And thanks to the new rules, this isn’t a temporary perk—it’s permanent.

Related: How to Buy an RV Park: Beginner’s Guide to Investing

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Federal vs. State Conformity

Even though the federal government now provides permanent bonus depreciation, not all states conform.

Some states—like Pennsylvania—don’t recognize full expensing. This creates differences between your federal and state income tax returns. Businesses must reconcile those differences and may face additional state level limitations.

That’s why working with a licensed independent CPA firm or experienced tax advisor is critical. They can help you navigate special rules, professional standards, and ensure compliance with both federal and state systems.

How Bonus Depreciation Impacts Different Groups

• Small businesses – Permanent 100% deductions mean faster payback on equipment purchases and upgrades.

• Business owners and professionals – Doctors, dentists, and lawyers can write off new technology or office improvements under Section 179 and bonus depreciation.

• Real estate investors – Through cost segregation studies, investors accelerate write-offs on commercial properties and boost cash flow.

• Subsidiary entities – Companies with complex structures gain consistent, long-term deductions.

Tax Planning Strategies 

Now that bonus depreciation 2025 is locked in, here are some smart tax strategies:

• Strategic timing – You no longer need to rush purchases before phase-outs, but you can still align acquisitions with taxable years where deductions offset the most business income.

• Pair with Section 179 – While Section 179 has deduction limits, using it alongside bonus depreciation maximizes savings.

• Plan for future years – Remember, accelerating deductions means fewer write-offs later. Coordinate with your tax advisor to balance immediate and long-term tax treatment.

• Use professional services – A licensed independent CPA firm ensures compliance with the internal revenue code section 168 and identifies qualified assets you might overlook.

• Real estate professionals – If you or your spouse qualify for real estate professional status, you may be able to use deductions to offset ordinary business income.

Why Bonus Depreciation Matters

The permanent restoration of 100 percent bonus depreciation is one of the most impactful tax reforms in decades. By ensuring full expensing remains in the tax code, the One Big Beautiful Bill Act gives high-income earners, business leaders, and real estate professionals the ability to confidently plan, invest, and grow.

This significant shift transforms how businesses approach capital expenditures, how investors structure deals, and how professionals reduce taxable income. It’s not just a short-term break—it’s a long-term tax strategy built into law.

Final Thoughts

For years, taxpayers worried about losing bonus depreciation as it phased down. But now, with the new rules under the One Big Beautiful Bill Act, bonus depreciation 2025 is permanent.

That means:

• Full expensing of qualified assets

• Predictable, permanent tax benefits

• More cash flow for reinvestment

• Less stress around timing capital investments

If you’re a high-income professional, small business owner, or investor in the United States, this law restores one of the most powerful tax strategies available today.

By working with a trusted tax advisor, understanding qualified property rules, and using tools like cost segregation studies, you can unlock substantial benefits and keep more of your wealth where it belongs—with you.