100% “Bonus" Depreciation: What Business Owners Need to Know in 2025 (and Beyond)

Among several tax-related provisions in the One Big Beautiful Bill Act (OBBBA) that President Trump signed into law on July 4, 2025 is a provision that restores 100% “bonus” depreciation for qualifying assets. What is “bonus” depreciation, and how can businesses use this provision of the OBBBA to their advantage in 2025 (and beyond)? New Jersey business tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:

What is “Bonus” Depreciation?

The term “bonus” depreciation refers to the ability to immediately deduct the full cost of qualifying assets in the tax year in which they are acquired—rather than expensing their acquisition costs over time. This provides an opportunity for immediate tax savings, and claiming “bonus” depreciation under the OBBBA will be advantageous for businesses in a wide range of circumstances.

When Can Businesses Claim “Bonus” Depreciation on Their Federal Tax Returns?

Under the OBBBA, businesses can claim “bonus” depreciation for qualifying assets acquired on or after January 20, 2025. Qualifying assets generally include:

• Listed property (including vehicles and aircraft, among other qualifying assets);
• Qualifying furniture, machinery and equipment with a useful life of 20 years or less;
• Qualified improvement properties and short-term rentals; and,
• Newly constructed real estate used for manufacturing, refining and other “qualified production activit[ies].”

While furniture, machinery and equipment with a useful life of 20 years or less qualifies for “bonus” depreciation indefinitely, newly constructed real estate used for “qualified production activit[ies]” is only eligible if construction begins before January 1, 2029 and the property is placed into service before January 1, 2031. Other rules and restrictions apply as well, and when claiming “bonus” depreciation on their federal tax returns, businesses will need to be very careful to ensure that they are maintaining strict compliance with the law.

What Are the Risks of Claiming “Bonus” Depreciation in 2025 (and Beyond)?

Companies that improperly claim “bonus” depreciation under the OBBBA will be at increased risk of facing scrutiny from the Internal Revenue Service (IRS). It is important to note, however, that improperly claiming “bonus” depreciation triggers immediate liability for interest and penalties regardless of whether the IRS opens an audit or investigation.

With this in mind, businesses that plan to claim “bonus” depreciation under the OBBBA will need to ensure that they take the necessary steps to both ensure and document statutory compliance. Not only will this help reduce their risk of facing IRS scrutiny, but it will also help ensure that they are prepared to withstand the IRS’ scrutiny if necessary.

Learn More from New Jersey Business Tax Lawyer Kevin E. Thorn

New Jersey business tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, has extensive experience advising businesses regarding federal tax compliance and representing businesses in high-stakes federal tax compliance matters. If you would like to discuss your business’s eligibility for “bonus” depreciation with Mr. Thorn in confidence, please call 201-842-7696 or tell us how we can get in touch online today.