100% Bonus Depreciation Is Back: Calculate Your Tax Savings
The OBBBA restored 100% bonus depreciation for business equipment. Calculate the first-year tax write-off on vehicles, machinery, software, and more.
100% Bonus Depreciation Is Restored for 2026
The OBBBA permanently restored 100% first-year bonus depreciation for qualifying business assets. Under the TCJA, bonus depreciation had been phasing down from 100% (2022) to 80% (2023), 60% (2024), 40% (2025). The OBBBA reversed this phase-down, making full expensing permanent for assets placed in service after January 19, 2025.
This means a business purchasing $100,000 in equipment in 2026 can deduct the entire $100,000 in year one instead of spreading it across 5-7 years. For a business in the 24% tax bracket, that is $24,000 in immediate tax savings.
What Qualifies for 100% Bonus Depreciation
Qualifying assets include most tangible business property with a recovery period of 20 years or less: machinery and equipment, computers and software, office furniture, certain vehicles (see limitations below), and qualified improvement property (QIP). The asset must be new or used (bonus depreciation under OBBBA applies to both new and used assets, as long as it is new to the taxpayer).
Vehicle Depreciation Limits
Passenger vehicles under 6,000 lbs are subject to "luxury auto" limits even with bonus depreciation. The first-year limit is approximately $20,200 with bonus depreciation. Vehicles over 6,000 lbs GVWR (most full-size SUVs and pickup trucks) are not subject to luxury auto limits and can take full bonus depreciation on the entire purchase price.
Strategic Timing for 2026
With 100% expensing now permanent, there is less urgency to accelerate purchases (unlike prior years when the percentage was declining). However, businesses with high 2026 income should still consider timing equipment purchases to maximize the deduction in their highest-income year. The deduction is most valuable when it offsets income taxed at your highest marginal rate.
The OBBBA making bonus depreciation permanent is estimated to reduce corporate taxes by $129 billion in 2026 alone. For small businesses, the math is straightforward: every dollar spent on qualifying equipment reduces your tax bill by your marginal rate (22-37 cents for individuals, 21 cents for C-corps).
