With the passage of the One Big Beautiful Bill Act (OBBBA), 100% bonus depreciation was made permanent for qualified property acquired and placed in service after January 19, 2025. Property will be treated as acquired no later than the date on which a written binding contract is entered into to acquire, renovate, or construct the property. This legislative change significantly enhances the value of cost segregation, a proven tax strategy that accelerates depreciation deductions by identifying and reclassifying building components into shorter recovery periods—typically 5, 7, or 15 years—instead of the standard 27.5 or 39 years. By front-loading depreciation, cost segregation can substantially improve cash flow and reduce tax liability in the early years of property ownership.
Prior to the passing of the One Big Beautiful Bill on July 4, 2025, bonus depreciation was on a steep decline:
- 2022: 100%
- 2023: 80%
- 2024: 60%
- 2025: 40%
- 2026: 20%
- 2027: 0%
The OBBBA eliminated the phasedown of bonus depreciation, restoring 100% bonus depreciation for qualified property acquired after January 19, 2025. It is important to note that property acquired on or before January 19, 2025 remains subject to the previous 40% bonus depreciation rate however late it is placed in service. This distinction makes the acquisition date, not the placed-in-service date, the critical consideration for planning and compliance.
Additionally, taxpayers must be mindful of the written binding contract rules when determining eligibility for 100% bonus depreciation. Under these rules, property is not considered “acquired” after the effective date if it was purchased pursuant to a written binding contract entered into before that date. Therefore, even if property is placed in service well after January 19, 2025, it may not qualify for 100% bonus depreciation if it was acquired under a written binding contract executed on or before that date. This nuance is especially important for long-lead-time or self-constructed assets, where acquisition and service dates may span different bonus depreciation regimes.
Contact us to obtain a cost segregation study performed by Certified Cost Segregation Professionals from the American Institute of Cost Segregation Professionals.