Bonus Depreciation Is Permanent. That Changes the Question.

What changed

First-year bonus depreciation was scheduled to phase down: 100 percent, then 80, then 60, stepping toward nothing. That schedule was repealed. For qualifying property acquired and placed in service after January 19, 2025, the allowance is 100 percent, and there is no sunset.

The immediate effect is obvious and has been widely reported. The more interesting effect is on how decisions get made, and that has had almost no attention.

The pressure that has been removed

Under a declining schedule, every acquisition carried an implicit deadline. Buying in December rather than January was worth a measurable percentage, and that gap did real work in sales conversations across several industries.

It also did damage. A deadline that is genuine but unrelated to the merits of the asset is an extremely effective way to get somebody to stop asking whether the asset is any good. A great deal of capital moved in Q4 on that basis.

What still constrains it

Permanence changes the timing pressure and nothing else. Every limitation that decided whether a deduction reached your liability still applies in the same order.

• The property must qualify and must be placed in service, not merely ordered or paid for.
• Basis, at-risk, and passive activity all apply before the deduction reaches you.
• The excess business loss limitation caps what offsets non-business income in the year, with the excess becoming a net operating loss usable against only eighty percent of later income.
• Many states do not conform, so a federal result and a state result can differ substantially.
• Recapture on disposal is unchanged, and an accelerated deduction taken now is frequently income later.

Where this lands

1. 01Stop treating year end as the deciding factor. It no longer is, and if a seller is still using it as one, ask why.
2. 02Underwrite the asset on its own merits first, with the tax treatment set to zero. If it does not stand up, the deduction is not rescuing it.
3. 03Size against what you can use. Permanence does not enlarge the annual limitation and the 2026 threshold moved downward.
4. 04Model the exit. An asset with a large first-year deduction and significant recapture on disposal is a timing instrument, not a permanent saving.
5. 05Check state conformity before relying on a federal number.