2025 Bonus Depreciation Percentage
The 2025 Bonus Depreciation Percentage is 100%.
Effective 2025-01-01Source: Notice 2026-11 (IRS)Verified 2026-08-29
Compared with 2024
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Special depreciation allowance | 60% | 100% | +40% (+66.7%) |
Who it applies to
Taxpayers claiming the additional first year depreciation deduction under Internal Revenue Code § 168(k) for qualified property acquired, or specified plants planted or grafted, after January 19, 2025. Property acquired on or before that date sits outside the 100 percent allowance shown here even if it was placed in service later in 2025, because the Act's amendments turn on when the property was acquired rather than on the tax year it was used in.
What changed this year, and why
The One, Big, Beautiful Bill Act replaced the annual phasedown of the applicable percentage for the § 168(k) additional first year depreciation deduction with a permanent 100 percent additional first year depreciation deduction for qualified property acquired, or specified plants planted or grafted, after January 19, 2025. The acquisition date, not the tax year, is what decides which rate applies, so 2025 is split in two: qualified property acquired after January 19, 2025 carries the 100 percent allowance, while property acquired on or before that date stays under the lower phasedown rate the Act replaced, which this page does not publish.
Common questions
- What is the bonus depreciation percentage for 2025?
- It depends on when the property was acquired, so 2025 has no single rate. The special depreciation allowance under § 168(k) is 100 percent for qualified property acquired, or specified plants planted or grafted, after January 19, 2025. Property acquired on or before that date remains under the annual phasedown that the Act replaced, at a lower rate than the one shown on this page.
- Why does January 19, 2025 matter for bonus depreciation?
- It is the line the Act drew. The annual phasedown of the applicable rate for the § 168(k) additional first year depreciation deduction was replaced with a permanent 100 percent additional first year depreciation deduction for qualified property acquired, or specified plants planted or grafted, after January 19, 2025. A purchase made a day earlier and a purchase made a day later fall on opposite sides of that change even though both are 2025 purchases.
- Is the 100 percent allowance permanent?
- That is how Notice 2026-11 describes it. The deduction that replaced the schedule which had been stepping the rate down each year is a permanent 100 percent additional first year depreciation deduction, for qualified property acquired, or specified plants planted or grafted, after January 19, 2025. Nothing in the notice schedules a reduction after that date.
What the percentage is applied to, and what is left afterwards
For 2025, a special depreciation allowance percentage applies to the cost or other basis of qualified property and qualified production property. The rule requires that this allowance be calculated first, before any regular depreciation is determined. Once the allowance figure is computed, the property's depreciable basis must be reduced by that amount. Only the remaining cost - that is, the original basis minus the allowance - is then subject to regular MACRS depreciation over the asset's recovery period. This two-step sequence matters because the bonus deduction and the ongoing depreciation together must account for the full cost of the asset without any double-counting. If the taxpayer uses the property entirely for business or investment purposes, the full business-use share of the basis is eligible. The concept is straightforward: claim the special allowance first, then depreciate what is left over under the normal MACRS schedule described elsewhere in the publication.
Depreciating the remaining cost. After you figure your special depreciation allowance for your qualified property or qualified production property, you can use the remain- ing cost to figure your regular MACRS depreciation de- duction (discussed in chapter 4). Therefore, you must re- duce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction.
Publication 946 (2025), How To Depreciate Property (IRS)
Electing out, by class of property
Taxpayers who prefer not to claim the special depreciation allowance may elect out, but the election operates on an all-or-nothing basis for each class of property. When the election is made, it applies to every asset within that class placed in service during the tax year; individual items within the same class cannot be picked and chosen. To exercise the election, the taxpayer must attach a statement to the return identifying both the election and the specific property class involved. Each owner of qualified property must make the election separately - each partnership, each S corporation, or each member of a consolidated group files its own statement. The election must generally be made on a timely filed return, including extensions, for the year the property is placed in service. Once made, it cannot be revoked without IRS consent obtained through a letter ruling. The publication also cautions that electing out of the allowance for property placed in service after a certain date means the property will not be subject to an alternative minimum tax adjustment for depreciation.
You can elect, for any class of property, not to deduct any special depreciation allowances for all property in such class placed in service during the tax year.
Publication 946 (2025), How To Depreciate Property (IRS)
Recapture when you dispose of the property
If you later sell, exchange, or otherwise dispose of property for which a special depreciation allowance was claimed, the portion of any gain that corresponds to the allowance is recaptured as ordinary income rather than receiving more favorable capital-gain treatment. The recapture amount is limited to the allowance that was actually allowed or that could have been allowed, regardless of whether the taxpayer reduced the basis correctly in prior years. This rule prevents taxpayers from receiving a double benefit - both the accelerated first-year deduction and preferential capital-gain rates on the same dollars of gain. The recapture applies to the full amount of the allowance, not just the portion attributable to the percentage rate in effect when the property was placed in service. Additional information on the mechanics of MACRS recapture can be found in the publication's chapter 4.
When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposi- tion is generally recaptured (included in income) as ordi- nary income up to the amount of the special depreciation allowance previously allowed or allowable.
Publication 946 (2025), How To Depreciate Property (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2026-11 (IRS)
- Special depreciation allowance
replaced the annual phasedown of the applicable percentage for the § 168(k) additional first year depreciation deduction with a permanent 100 percent additional first year depreciation deduction for qualified property acquired, or specified plants planted or grafted, after January 19, 2025.