The phase-out era is done. Now that 100% bonus depreciation is locked in for good under the One Big Beautiful Bill Act, real estate investors and tech-savvy property owners are looking at an entirely new tax landscape, and the sharpest minds are already making their moves.
In recent years, there was a kind of quiet freeze among property investors. It wasn’t that deals vanished or financing dried up completely, but losing bonus depreciation was draining one of the best tax breaks in the playbook. The math just didn’t work like it used to.
Everything changed on July 4, 2025, when the One Big Beautiful Bill Act (OBBBA) became law. Suddenly, 100 bonus depreciation for qualified property acquired and put in service after January 19, 2025, was back, permanently.
Where bonus depreciation stood before the OBBBA
To see what OBBBA fixed, you have to know what was broken. The Tax Cuts and Jobs Act of 2017 let businesses deduct 100% of qualifying assets placed in service after September 27, 2017, but only until January 1, 2023. Then, the rate was set to fall by 20 points each year, running to a bonus depreciation phase out by 2027. Here’s how the phase-out was scheduled to look:
| Tax Year | Bonus Depreciation % (Pre-OBBBA) | Bonus Depreciation % (Post-OBBBA) |
| 2022 | 100% | 100% |
| 2023 | 80% | 80% |
| 2024 | 60% | 60% |
| 2025 | 40% (before Jan. 20) | 100% (after Jan. 19) |
| 2026 | 20% | 100% |
| 2027+ | 0% | 100% (permanent) |
Without the new law, bonus depreciation would’ve dropped to 40% in 2025, 20% in 2026, and then disappeared by 2027. That path was killing the math for commercial buys, especially when investors looked at first-year cash flow vs. purchase price. The big shift now isn’t just that the rule is better, it’s that the bonus depreciation in 2026 is permanent.
Bonus depreciation rules 2026 and what actually qualifies
Bonus depreciation percentage 2026 aren’t wildly different, OBBBA left the key definition of eligible property almost unchanged. Qualifying assets still include things like equipment, machinery and certain improvements with a usable life of 20 years or less. For real estate folks, this covers a ton: Fixtures, flooring, specialty electrical systems, site improvements and certain qualified improvements. Keep these points in mind:
- The property must be acquired and put into service after January 19, 2025, for full 100% bonus depreciation.
- It doesn’t apply retroactively to assets bought in 2023 or 2024.
- Used property counts, as long as it’s new to you.
The IRS didn’t wait to give guidance. In January 2026, the Treasury and IRS released Notice 2026-11, which explained permanent 100% first-year depreciation for eligible property bought after January 19, 2025.
The $600K example
Here’s where the 2026 bonus depreciation percentage gets real. Take a $600,000 commercial building. With the standard 39-year straight-line depreciation, you’d get about $15,385 a year. That’s a slow trickle, barely moving the needle on first-year cash flow.
A typical cost segregation study finds 30–45% of the value in shorter-life stuff; HVAC, wiring, parking lots and interior finishes, eligible for 5-, 7- or 15-year depreciation. On a $600K deal, that’s $180,000–$270,000 in assets you can pull forward. Thanks to 100% bonus depreciation, that’s all deductible in Year 1.
Combining bonus depreciation with cost segregation with the front-loading strategy
The real game-changer now isn’t just bonus depreciation: It’s pairing it with a cost segregation study to move as much value as possible into bonus-eligible asset classes, stacking years of write-offs into one big first-year deduction.
A cost segregation study splits parts of a property from the 39-year, or 27.5-year for residential, schedule into 5-, 7- or 15-year property. At 100% bonus depreciation, you get the entire deduction in Year 1. That frees up capital you’d otherwise have tied up for years, so you can roll it into your next deal.
Why “permanent” changes the investment calculus
There’s a big difference between a rule set to expire and one that’s here permanently. If you’re front-loading depreciation with an expiring rule, there’s risk, Congress could pull the rug out. But when it’s a feature permanently baked into the tax code, you can underwrite deals with certainty.
Investors who lean on tech are already changing how they model deals. Instead of treating bonus depreciation as a “bonus if it sticks”, it’s just part of the baseline. It changes Year 1 IRR for every qualifying deal in a real, predictable way.
FAQ
It’s 100% for qualifying property acquired and placed in service after January 19, 2025.
Yes, as long as the property is new to you. It doesn’t have to be brand-new from the factory or a new building.
Bonus depreciation is the tax break that lets you write off qualifying assets instantly. A cost segregation study is how you figure out which parts of your property actually qualify.
Not always. The federal law sets the rule, but states make their own decisions about following it.
