OBBBA permanently restored 100% bonus depreciation under Section 168(k) for qualified property placed in service after January 19, 2025. Covers MACRS 20-year-or-less assets including vehicles, machinery, computer equipment.
Detailed instructions, formula notes, and US-context guidance shown in the calculator above.
Disclaimer: Estimate only. Consult a qualified professional for decisions with major financial, legal, or health consequences.
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Calculator information
📋 How to use this calculator
- Enter asset cost and business-use percentage.
- Select placed-in-service year — 2025+ qualifies for 100% (OBBBA permanent).
- Select MACRS recovery life (5, 7, 15, or 20 years).
- Enter your marginal tax bracket.
- Review year-1 bonus deduction + comparison to straight-line MACRS.
🧮 Section 168(k) Bonus Depreciation (100% Permanent)
Year_1_deduction = Cost x Business_Use_% x Bonus_%
- Bonus % by placed-in-service year: 2025+ = 100% (OBBBA), 2024 = 60%, 2023 = 80%
- Qualifying property: MACRS recovery period ≤ 20 years
- Includes: vehicles, machinery, computers, qualified improvement property (QIP), some leasehold improvements
- Listed property (vehicles): subject to Section 280F luxury auto caps
- Used property qualifies if first time placed in service by taxpayer
Section 168(k) is permanent 100% post-OBBBA — no more sunset. Stacks with Section 179 (179 first, then 168(k) on remainder). Real property (residential rental 27.5-yr, commercial 39-yr) does NOT qualify. QIP (qualified improvement property — interior non-structural improvements to non-residential building) qualifies at 15-yr life.
💡 Worked example: $80K printing press, 100% business use, placed in service 2026
Given:- Asset: industrial printing press
- Cost: $80,000
- Business use: 100%
- MACRS recovery life: 7 years
- Placed in service: April 2026
- Marginal tax rate: 24%
Steps:- Depreciable basis: $80,000 x 100% = $80,000
- Bonus % (2026): 100%
- Year-1 bonus deduction: $80,000 x 100% = $80,000
- MACRS straight-line Y1 comparison: $80,000 / 7 x 50% (half-year) = $5,714
- Y1 tax savings from bonus: $80,000 x 24% = $19,200
Result: $19,200 saved Y1 vs $1,371 with straight-line. The cash-flow swing funds 24% of the equipment purchase immediately at tax time.
❓ Frequently asked questions
Section 179 or bonus depreciation — which should I use?
Use both. Section 179 elected FIRST (with $2.5M cap and $4M phase-out), then bonus depreciation on any remaining cost basis. Differences: 179 limited to taxable income (can't create NOL); bonus has no income limit and CAN create NOL. 179 elected per asset (can pick subset); bonus applies to all qualifying assets unless you elect out by class. Best practice: use 179 for assets you definitely want immediate deduction on, let bonus handle the rest automatically.
Can I take bonus on a used asset?
Yes — OBBBA preserved the used-property eligibility from TCJA. Used qualifies as long as it's new to you (not previously placed in service by you or a related party). Used trucks, used equipment, used printing presses — all eligible at 100% bonus in 2025+. The asset just must not have been depreciated by you before.
Does bonus depreciation create a tax loss I can carry?
Yes, unlike Section 179 (which can't reduce business income below zero). A $200K bonus deduction with $150K business income creates a $50K NOL (net operating loss). NOLs from 2018+ can offset up to 80% of taxable income in carryforward years (no longer eligible for carryback in most cases). Excess QBI loss carries to next year. This makes bonus great for large equipment purchases that exceed annual income — recoup the tax benefit over multiple years.
What's qualified improvement property (QIP)?
Interior, non-structural improvements to NON-RESIDENTIAL buildings, placed in service AFTER the building was first placed in service. Includes: drywall renovations, lighting, flooring, HVAC components inside walls, plumbing, fire protection. Does NOT include: enlargements, elevators/escalators, structural framework. QIP has 15-year MACRS life and IS eligible for 100% bonus — making interior renovation extremely tax-advantaged.
What about luxury auto caps for vehicles?
Section 280F caps first-year depreciation (including bonus) for passenger autos at ~$20,400 (2026 indexed). For SUVs over 6,000 lb GVWR: no Section 280F cap (full bonus depreciation up to vehicle cost). Heavy SUV thus allows full $80K F-150 to be 100% bonus-depreciated in Y1, vs limited $20K on a Tesla Model 3. Plan vehicle purchases around the 6,000 lb threshold for business use.
📚 Sources & references
Last updated: May 23, 2026