After months of speculation and political maneuvering, it’s official: 100% bonus depreciation is back thanks to the recently passed Tax Relief for American Families and Workers Act of 2024, popularly dubbed the “Big Beautiful Bill.” The bill revives one of the most powerful tax incentives for businesses, allowing them to fully deduct the cost of qualifying assets in the year they are placed in service.
This legislative shift marks a major reversal of the phasedown plan established under the 2017 Tax Cuts and Jobs Act (TCJA), which had gradually reduced bonus depreciation from 100% in 2022 to 60% in 2024 and planned for a full phase-out by 2027. With the new law now in effect, businesses can once again take advantage of 100% bonus depreciation for qualified assets placed in service starting in 2025.
What is 100% Bonus Depreciation and Why Does it Matter?
Bonus depreciation allows businesses to immediately write off the full cost of eligible assets in the year they are placed in service. This includes machinery, equipment, and certain improvements to nonresidential property.
For commercial real estate owners, the benefits are amplified when paired with cost segregation studies, which accelerate depreciation by identifying and reclassifying components of a building into shorter-lived asset categories. When combined with 100% bonus depreciation, this strategy can generate significant upfront tax savings, freeing up capital for reinvestment.
Why It’s Coming Back Now
The return of 100% bonus depreciation isn’t just about tax policy; it’s about economic momentum. Lawmakers cited ongoing inflation, higher interest rates, and a cooling real estate market as key reasons for reintroducing the incentive. Supporters argue that the deduction will drive capital investment, job creation, and economic resilience, especially for small and midsized businesses.
The Big Beautiful Bill passed with bipartisan support, signaling a renewed commitment to pro-growth tax policy. While it includes provisions aimed at families and low-income earners, the reinstatement of 100% bonus depreciation was a top priority for many in the business community and a win for commercial property investors and tax professionals alike.
What This Means for 2025 and Beyond
Under the newly passed bill, 100% bonus depreciation is reinstated starting in tax year 2025. It’s not yet clear if this reinstatement will be permanent or temporary, but for now, businesses can confidently plan around full expensing of qualifying property.
This change allows property owners and operators to revisit capital investment plans they may have delayed during the phase-down years. Combined with other incentives like Cost Segregation, Section 179D and the R&D tax credit, the full deduction presents a unique opportunity to reduce taxable income and improve cash flow.
What Should Commercial Property Owners and Businesses Do Now?
If you own or operate commercial property, now is the time to act. With 100% bonus depreciation reinstated:
- Review planned acquisitions or property improvements to see if placing them in service in 2025 will maximize your deductions.
- Schedule a cost segregation study to reclassify eligible assets into 5-, 7-, or 15-year property, making them eligible for full expensing.
- Work with your tax advisor to create a forward-looking tax strategy that includes this and other new provisions in the Big Beautiful Bill.
At CSSI, we’ve completed over 55,000 engineering-based studies and helped clients generate substantial tax savings through bonus depreciation and cost segregation. Our team is ready to help you navigate these changes and optimize your investment strategy. Contact us today!
