What the One Big Beautiful Bill made permanent — and what it left exactly where it was — for real estate teams modeling 100% bonus and cost segregation.
Overview
For years bonus depreciation was a phase-down story — 100%, then 80%, 60%, 40% — and most planning assumed a declining percentage. The One Big Beautiful Bill changed the frame. For qualifying property acquired and placed in service after January 19, 2025, the 100% allowance is restored. The headline is simple; the work is in the details.
What is permanent
The 100% special depreciation allowance applies to qualified property — generally tangible property depreciated under MACRS with a recovery period of 20 years or less — acquired and placed in service after January 19, 2025. For real estate teams, that restores the full force of cost segregation: correctly identified shorter-life components and land improvements can be expensed in the placed-in-service year rather than recovered over decades.
What is not
Several things did not change. Property acquired on or before January 19, 2025 remains on the phase-down schedule (40% for 2025). Property required to be depreciated under ADS is still excluded. Passive-activity and at-risk rules still gate whether a technically valid deduction is usable in the current year, and recapture at disposition — ordinary-income treatment up to depreciation allowed, including the bonus allowance — is unchanged. A bigger first-year deduction can still be a smaller real benefit if the taxpayer cannot use it.
The real work
The strategy is not “take the biggest deduction available.” It is to accelerate cost recovery only where the asset qualifies, the file is defensible, and the taxpayer-level outcome improves after passive limits, state treatment, and recapture. That means a capitalization policy, a classification framework, placed-in-service evidence, and a deliberate election-out analysis by class of property.
FAQ
Is 100% bonus permanent now?
It is restored for qualifying property acquired and placed in service after January 19, 2025; earlier property stays on the prior phase-down.
Does cost segregation still help?
Yes — more than ever. Cost segregation identifies the shorter-life assets that 100% bonus then applies to.
Can I still elect out?
Yes, by class of property on a timely return; the election generally cannot be revoked without IRS consent.
This content is for informational purposes only and does not constitute tax, legal, or financial advice. Applicability depends on individual circumstances, asset characteristics, and current law. Consult a qualified tax advisor, CPA, or tax attorney before implementing any strategy discussed here.