What bonus depreciation is and why it matters
Normally, when a business buys equipment — a computer, a piece of machinery, a work vehicle — the cost is deducted gradually over several years through depreciation. Bonus depreciation allows businesses to deduct the full cost in the year the property is purchased and placed in service.
The One Big Beautiful Bill Act permanently reinstated 100% bonus depreciation for qualifying property placed in service after January 19, 2025. This reversed the phase-down schedule that had reduced the rate to 80% in 2023, 60% in 2024, and 40% in 2025.
For a small business that buys $50,000 of equipment in 2026, 100% bonus depreciation means a $50,000 deduction this year instead of roughly $10,000 per year over five years. The timing difference is significant for cash flow and tax planning.
What property qualifies for 100% bonus depreciation
Qualifying property includes tangible personal property with a recovery period of 20 years or less — computers, machinery, furniture, tools, and most equipment used in a business. It also includes certain film, television, and live theatrical productions.
Vehicles generally qualify, though luxury passenger automobiles are subject to annual caps under the luxury auto rules. Heavy vehicles with a gross vehicle weight rating over 6,000 pounds — SUVs, pickup trucks, vans — may qualify for a larger deduction under Section 179 or bonus depreciation, subject to their own limits.
Used property can also qualify for bonus depreciation as long as it is new to you — meaning you have not previously used it and it was not acquired from a related party.
Bonus depreciation vs. Section 179: what is the difference
Section 179 and bonus depreciation both allow immediate expensing of business property, but they work differently. Section 179 has an annual dollar limit ($2.56 million in 2026) and cannot create a loss — it is limited to your business income. Bonus depreciation has no dollar cap and can create a loss that carries forward.
For most small businesses, either method produces the same result. The choice matters when you want to create a net operating loss or when your purchases exceed the Section 179 limit. A tax professional can help you decide which approach is better for your situation.
You can use both in the same year — apply Section 179 first, then bonus depreciation on any remaining cost basis.
How RoboTax can help you capture this deduction
Many small business owners and self-employed workers buy equipment throughout the year without tracking whether it qualifies for immediate expensing. RoboTax connects to your accounts and can surface equipment purchases, vehicle costs, and other capital expenditures so a tax professional can confirm which items qualify for 100% bonus depreciation or Section 179.
The difference between spreading a $30,000 equipment purchase over five years versus deducting it all in 2026 can be $6,000 or more in tax savings this year. Capturing this deduction requires knowing what you bought and when — which is exactly what RoboTax helps surface.
Frequently asked questions
Is bonus depreciation 100% in 2026?
Yes. The One Big Beautiful Bill Act permanently reinstated 100% bonus depreciation for qualifying property placed in service after January 19, 2025, reversing the phase-down that had reduced it to 40% in 2025.
What types of property qualify for 100% bonus depreciation in 2026?
Tangible personal property with a recovery period of 20 years or less, including computers, machinery, furniture, tools, and most business equipment. Used property also qualifies if it is new to you.
What is the difference between bonus depreciation and Section 179?
Section 179 has an annual dollar limit ($2.56 million in 2026) and cannot create a loss. Bonus depreciation has no dollar cap and can create a net operating loss that carries forward. Both allow full first-year expensing.
Can I use bonus depreciation on a vehicle?
Yes, though luxury passenger automobiles are subject to annual caps. Heavy vehicles over 6,000 lbs GVWR — SUVs, trucks, vans — may qualify for larger deductions. A tax professional can confirm the limits for your specific vehicle.
Sources and further reading
These resources are included for educational context. RoboTax is not tax, legal, or financial advice, and this content should be reviewed with a qualified tax professional before being used for filing decisions.