“Should I wait to buy new equipment?” Why would you?
Greetings from Killingsworth Spencer in Roswell.
The One Big Beautiful Bill Act (OBBBA) was signed into law July 4th, 2025, and brought back 100% bonus depreciation; this time, it’s permanent. If you bought qualifying business property last year, you may be able to deduct the entire cost on your 2025 tax return instead of spreading it out over three to twenty years. The same applies for any equipment purchased in 2026 and beyond.
What Actually Changed
The Tax Cuts and Jobs Act (TCJA) back in December 2017 introduced 100% bonus depreciation as a temporary perk. It was scheduled to phase out slowly: dropping to 80% in 2023, then 60%, 40%, and eventually disappearing completely by 2027. Many savvy business owners accelerated their equipment purchases in 2022 to take advantage before the benefit started shrinking.
OBBBA permanently restored 100% bonus depreciation for qualifying property placed in service after January 19, 2025. No more phase-outs. No more expiration dates.
Here is an example. One of our clients, a contractor in East Cobb, bought a $75,000 work truck in March of 2025. Under TCJA, he would have only been able to deduct 40% or ($30,000) in year one. Now? He gets to deduct the full $75,000 in 2025.
The January 20 Trap (Know the Rules)
To qualify for 100% bonus depreciation, your property must be both acquired and placed in service after January 19, 2025.
“Placed in service” means the asset is ready and available for use in your business, not just purchased or delivered.
What Qualifies (It’s More Than You Think)
This isn’t just about trucks and tractors. Bonus depreciation applies to a surprisingly wide range of business property, including:
Tangible Property: Anything with a recovery period of 20 years or less and acquired after January 19, 2025. This includes vehicles (over 6,000 pounds), furniture, computers, machinery, and most manufacturing equipment.
Software: Off-the-shelf computer software qualifies, which is great news for businesses upgrading their tech infrastructure.
Qualified Improvement Property (QIP): This is interior improvements to commercial buildings: think new flooring, lighting, HVAC upgrades, or office renovations.
Specialized Assets: The rules also cover certain film and television production costs, as well as specific plants (like fruit or nut-bearing trees) for agricultural businesses.
What doesn’t qualify? Land, buildings themselves (the structure), and property inherited or received as a gift and pre-existing contracts binding on or before January 19, 2025.
You Don’t Have to Take the Full 100% (And Why You Might Not Want To)
You are not required to take the full 100% bonus depreciation. The IRS allows flexibility.
Option 1: Businesses may elect to skip the 100% deduction, likely choosing to depreciate the asset over a longer period, which can be useful if they have low income in the current year.
Option 2: Opt out of bonus depreciation entirely for specific asset classes. Maybe you take 100% on vehicles but opt out for furniture.
Option 3: Cherry-pick individual components of self-constructed property to expense separately.
Why would you do this? Strategic tax planning. If you are expecting a big contract to close in 2026 that will spike your income, it might make sense to “bank” some depreciation for 2026 instead of using it all now for your 2025 tax return.
We are here to help
Killingsworth Spencer is here to help our clients in North Fulton and Cobb counties fully understand their options to save taxes today and in the future. We have CPAs, Enrolled Agents, Bookkeepers, and payroll specialists on staff to help our clients with accounting and tax-related matters. For more information or to schedule an appointment, please call us at 770-552-8286. Visit us at www.killingsworthspencerllc.com
Disclaimer: This post is for general information only and should not be taken as legal or financial advice.