For 2025 tax returns, bonus depreciation depends on when you acquired the property. Property acquired after January 19, 2025, qualifies for 100% bonus depreciation under the One Big Beautiful Bill Act. Property acquired (or under a binding contract) before January 20, 2025, stays at the old 40% rate, even if placed in service later in 2025.
This content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.
Why 2025 has two bonus rates
Under the 2017 tax law, bonus depreciation was phasing down: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% after that.
Then the One Big Beautiful Bill Act, signed July 4, 2025, restored 100% bonus depreciation permanently, but only for property acquired after January 19, 2025. That created a split year.
| When you acquired the property | 2025 bonus rate |
|---|---|
| Before January 20, 2025 (or binding contract before then) | 40% |
| After January 19, 2025 | 100% |
For long-production-period property and certain aircraft acquired before the cutoff, the old-law rate for 2025 is 60%.
The acquisition date is what counts
The key date is when you acquired the property, generally when you signed a binding written contract. Some examples:
- Signed a purchase contract December 15, 2024, closed February 2025: old rules, 40%
- Signed a purchase contract February 1, 2025, closed March 2025: 100%
- Started building in 2025 after January 19: generally 100% for self-constructed property
- Started building before January 20, 2025: generally the old rate, though some components may qualify separately under an election
The optional 40% election
The new law lets you elect to use 40% instead of 100% for property placed in service in your first tax year ending after January 19, 2025. Why would anyone want less?
- You can't use a large loss this year because of passive loss limits
- You expect to be in a higher bracket in future years
- You want to avoid wasting deductions against income taxed at low rates
You can also elect out of bonus depreciation entirely by asset class.
What this means for cost segregation
If you bought a rental or commercial property in 2025:
- Acquired after January 19: a cost segregation study can turn the 5-, 7-, and 15-year parts into a 100% first-year deduction
- Acquired before January 20: a study still helps, but only 40% of those parts are deducted upfront, with the rest depreciated over their normal lives
Running out of time? Key dates
- October 15, 2026: deadline for individual 2025 returns on extension
- Already filed without a study? If you've filed only one return for the property, you may be able to amend. Otherwise, you can catch up later with a look-back study and Form 3115.
- State returns: many states don't follow federal bonus depreciation, so expect differences.
Frequently asked questions
Is bonus depreciation 100% for all of 2025?
What about 2026?
Does used property qualify?
See what your property may qualify for
Run our 2-minute STR Qualification Quiz or model your Low / Mid / High cost segregation range.
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Read guideThis content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.