Bonus Depreciation Returns in 2025 – What This Means for Your Business

A major tax planning opportunity is returning in 2025 that business owners should be aware of: 100% bonus depreciation.

Bonus depreciation allows businesses to immediately deduct the full cost of qualifying assets in the year they are placed into service, instead of spreading the deduction over several years. After being phased down in recent years, the deduction is restored to 100% for assets placed in service in 2025.

This applies to many common business purchases, including equipment, machinery, technology, furniture, tools, certain vehicles (subject to limits), and qualifying improvements to commercial property. Both new and used assets may qualify, as long as they are new to your business.

For real estate owners, bonus depreciation also makes cost segregation studies especially powerful again in 2025, allowing certain components of a property to be depreciated much faster.

Timing is critical. To qualify, assets must be placed in service during 2025, meaning they are ready and available for use — not just purchased or financed.

While bonus depreciation can create significant tax savings, it should be used strategically. State tax rules, future income expectations, and how this interacts with other deductions all matter.

If you are planning major purchases, renovations, or property acquisitions in 2025, this is something we should review before decisions are finalized.

If you’d like to review how bonus depreciation fits into your 2025 plan, please schedule a tax planning call through the KMR portal or reply to this email and we’ll get you on the calendar.

---

IRS Sources:

Internal Revenue Code §168(k)

IRS Publication 946, How to Depreciate Property

IRS Form 4562 Instructions

IRS Cost Segregation Audit Technique Guide