Ben's answer
Is Bonus Depreciation 100% in 2026? The Rule Explained
Yes, for most qualifying property. Under the 2025 tax law (P.L. 119-21), bonus depreciation is a permanent 100% for qualified property acquired and placed in service after January 19, 2025. Property acquired, or under a written binding contract, before January 20, 2025 stays under the older phase-down rules.
- 100%The 2025 tax law, Public Law 119-21 (the One, Big, Beautiful Bill Act), made bonus depreciation (the IRS calls it the "special depreciation allowance" or "additional first year depreciation") a permanent 100% for qualified property acquired and placed in service after January 19, 2025.
- 40%For property in that group placed in service during 2025, the rate was 40% (60% for certain long production period property and certain aircraft).
- 60%For property in that group placed in service during 2025, the rate was 40% (60% for certain long production period property and certain aircraft).
- 20%For that group placed in service in 2026, the rate is generally 20% (IRS Revenue Procedure 2026-15, section 2.02,
Yes, for most qualifying property. The 2025 tax law, Public Law 119-21 (the One, Big, Beautiful Bill Act), made bonus depreciation (the IRS calls it the "special depreciation allowance" or "additional first year depreciation") a permanent 100% for qualified property acquired and placed in service after January 19, 2025. The IRS confirmed this in Notice 2026-11, issued January 14, 2026. The catch is the acquisition date: property you acquired, or agreed to buy under a written binding contract, before January 20, 2025 doesn't get the permanent 100% rate.
Last checked: October 28, 2026. This page explains the rule only. It is general information, not tax, legal, or financial advice.
The short version
| Rate | 100% for qualified property acquired and placed in service after January 19, 2025, per IRS Publication 946. |
|---|---|
| No end date | the law removed the old deadline that property be placed in service before January 1, 2027, and replaced the yearly phase-down with a permanent 100%. |
| Acquisition date matters | property isn't treated as acquired after the date you signed a written binding contract for it. |
| It's automatic unless you elect out | you must take it for qualified property unless you elect out, by class of property. |
The acquisition-date rule
Notice 2026-11 tells taxpayers to use the existing bonus depreciation regulations with "January 19, 2025" swapped in for the old September 27, 2017 date. In plain terms:
| Bought outright | the property qualifies if you acquired it after January 19, 2025. |
|---|---|
| Written binding contract | the acquisition date is the latest of the date the contract was signed, the date it became enforceable under state law, the end of any cancellation period, or the date all contingencies were met. A contract signed before January 20, 2025 means the property is treated as acquired before that date. |
| Built for you or by you | self-constructed property generally counts as acquired when physical work of a significant nature begins. |
| Non-binding contract | the acquisition date is generally when you paid or incurred more than a tenth of the total cost (not counting land and early planning). |
Property acquired before January 20, 2025 stays under the older Tax Cuts and Jobs Act rules, which phased the rate down each year. For property in that group placed in service during 2025, the rate was 40% (60% for certain long production period property and certain aircraft). For that group placed in service in 2026, the rate is generally 20% (IRS Revenue Procedure 2026-15, section 2.02, https://www.irs.gov/pub/irs-drop/rp-26-15.pdf). If you have property like that going into service now, ask your tax professional which rate applies.
Choosing less than 100%
- Elect out: you can elect not to take any bonus depreciation for an entire class of property placed in service during the tax year. You attach a statement to a timely filed return, and you can't revoke it later without IRS consent.
- Lower rate for one year only: for your first tax year ending after January 19, 2025, you can elect 40% (60% for long production period property and certain aircraft) instead of 100%. For a calendar-year business, that's the 2025 tax year, not 2026.
Who qualifies
- Businesses that acquire and place qualified property in service for business or income-producing use.
- Qualified property includes tangible property depreciated under MACRS with a recovery period of 20 years or less, computer software covered by section 167(f)(1), water utility property, qualified film, TV and live theatrical productions, and qualified sound recording productions.
- Property can be new or certain used property.
- Most buildings don't qualify, because nonresidential real property is generally depreciated over 39 years. A separate, elective allowance for qualified production property covers certain factory buildings (see below).
- Property placed in service and disposed of in the same tax year doesn't qualify.
How the deduction works
You multiply the property's depreciable basis by the bonus rate. Depreciable basis is cost (or other basis) times your business-use share, reduced by items like any Section 179 deduction you take on the same property. Whatever basis is left after bonus depreciation is depreciated under the regular MACRS rules.
If you later sell property you took bonus depreciation on, any gain is generally recaptured as ordinary income up to the bonus amount you were allowed.
How to get it
How to get started
- List the business property you bought or placed in service this year, with the purchase and contract dates for each item.
- Check each item against the qualified property rules in IRS Publication 946, Chapter 3.
- Talk with your tax professional about whether to take bonus depreciation, elect out for a class of property, or use Section 179 first.
- Bonus depreciation is figured and reported on Form 4562, Part II, line 14 (Part V, line 25 for listed property such as many vehicles).
- Keep invoices, contracts and placed-in-service dates. The acquisition date decides which rate applies.
Programs that may match
Look beyond bonus depreciation
FAQ
FAQ
Is bonus depreciation 100% in 2026?
Yes, for qualified property acquired and placed in service after January 19, 2025. The 2025 tax law (P.L. 119-21) made that 100% rate permanent.
Does bonus depreciation phase out after 2026?
No. The law removed the old requirement that property be placed in service before January 1, 2027 and replaced the yearly phase-down with a permanent 100% rate for property acquired after January 19, 2025.
What if I signed the purchase contract before January 20, 2025?
Property isn't treated as acquired after the date a written binding contract for it was entered into. So property under a binding contract signed before January 20, 2025 doesn't get the permanent 100% rate and follows the older phase-down rules.
Does used equipment qualify for bonus depreciation?
It can. IRS Publication 946 says qualified property can be either new property or certain used property.
Can I choose not to take 100% bonus depreciation?
Yes. You can elect out for any class of property placed in service during the year. For your first tax year ending after January 19, 2025 only, you could instead elect 40% (60% for certain long production period property and aircraft).
Sources
- Internal Revenue Service, Publication 946 (2025), How To Depreciate Property
- Internal Revenue Service, Notice 2026-11, Interim Guidance on Additional First Year Depreciation Deduction under § 168(k)
- Internal Revenue Service, IR-2026-06, Treasury, IRS issue guidance on the additional first year depreciation deduction amended as part of the One, Big, Beautiful Bill
- Internal Revenue Service, One, Big, Beautiful Bill provisions
- Internal Revenue Service, About Form 4562, Depreciation and Amortization