Another Bite at the 100% Depreciation Apple

We are always a bit amused by politicians who position themselves as “pro-growth.” We have yet to find a politician who is against growth. The difference lies in the way they plan to achieve that growth. The One Big Beautiful Bill Act lays out President Trump’s attempts to spur growth, and a large part of that effort is based on re-establishing a 100% depreciation opportunity.

Since the Great Financial Crisis in 2008, accelerated depreciation has been used several times to successfully spur economic growth, and it is a policy that, on a stand-alone basis, has bipartisan support. The key sticking point has always been that all this depreciation reduces taxable income and therefore government revenue.

The Economic Stimulus Act of 2008 initially provided a 50% bonus depreciation for qualified property acquired and placed in service during 2008. This was extended by the American Recovery and Reinvestment Act of 2009 for property placed in service during 2009 and further extended through December 31, 2010, by the Small Business Jobs Act of 2010.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 increased the bonus depreciation to 100% for qualified property acquired and placed in service after September 8, 2010, and before January 1, 2012.

The Tax Cuts and Jobs Act (TCJA) of 2017 allowed businesses to immediately expense 100% of the cost of eligible assets placed in service after September 27, 2017, through December 31, 2022.

According to the U.S. Bureau of Economic Analysis (BEA), nonresidential fixed investment (especially in equipment) accelerated sharply in 2018, growing 7.8% in 2018. But growth slowed after that initial surge as the plan front loaded investment. BEA data showed investment fell in areas not favored by bonus depreciation, like structures,

The One Big Beautiful Bill brings 100% depreciation back permanently for most qualifying property placed in service on or after January 19, 2025.  This means businesses can immediately deduct the full cost of eligible assets in the year they’re placed in service—rather than depreciating over multiple years.

We used Perplexity AI to create the summary of the new provisions below. Everyone that owns a business should consult with their tax professionals develop strategies to use this provision effectively to accelerate cash flow and project ROI.

Eligible Assets (Qualified Property)

• Tangible property with a recovery period of 20 years or less (e.g., vehicles, machinery, equipment, furniture, computer software, water utility property).
• Qualified improvement property (such as interior upgrades to commercial buildings)—now explicitly eligible.

Qualified Production Property (QPP)

A new elective provision allows 100% depreciation for nonresidential real property used in manufacturing or production. To qualify:

• Construction must begin after Jan. 19, 2025 (before 2029), and assets must be placed in service before 2031.
• Also covers some used real property acquired after Jan. 19, 2025, if not previously used in production activity between Jan. 1, 2021 and May 12, 2025.

With QPP, entire facility investments—except land—could be fully deductible in the first year.

Timing Notes & Partial-Year Transition

• Assets placed in service between Jan. 1–18, 2025 only qualify for 40% bonus depreciation.
• The permanent 100% treatment applies to assets placed in service on or after Jan. 19, 2025.

Even if a contract or invoice existed before Jan. 19, 2025, the key is the “placed in service” date—items must be ready and available for use on or after that date to qualify.

Planning & Strategic Implications

1. Cash-Flow Boost: Businesses can dramatically reduce taxable income in the year of investment, improving liquidity and ROI.
2. Capital Budgeting: Especially beneficial for manufacturing, data centers, AI infrastructure, biotech, and asset-heavy operations.
3. Combine with Cost Segregation: Use a cost segregation study to identify shorter-lived components within larger properties, making more of the overall structure eligible for accelerated expensing.
4. Interaction with Section 179: Section 179 expensing is also expanded—now up to $2.5M limit, twice the old limit, with a phase-out beginning at $4M (indexed for inflation)—but bonus depreciation typically offers fewer use constraints.

Have a great week!

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All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

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By: Adam