100% Bonus Depreciation Is Back: Here’s What Business Owners Should Do Before Year-End
If you’ve been considering new equipment—whether that’s laptops for your team, a delivery van, or upgraded machinery—2025 is your window. The latest tax bill restores 100% bonus depreciation, allowing you to deduct the full cost of qualifying purchases in the year you place them in service.
This isn’t just an accounting perk—it can make a significant difference in your bottom line. Let’s walk through what it means, how it compares to Section 179, and how you can put it to work before year-end.
What Is Bonus Depreciation?
Instead of spreading deductions over years, bonus depreciation lets you deduct everything upfront:
Immediate Deduction: 100% write-off in the year the asset is “placed in service.”
Qualifying Assets: Equipment, computers, vehicles under 6,000 lbs, furniture—anything with a useful life under 20 years.
New or Used: Both qualify if it’s new to your business.
Effective Date: Applies to assets placed in service after January 19, 2025.
How It Differs from Section 179
You might be wondering how this differs from other write-offs.
Section 179: Dollar cap of $2.5M per year; requires taxable income.
Bonus Depreciation: No dollar cap; can create a business loss (potentially carried forward).
Best Strategy: Many business owners combine both. For background, check out our guide on capital leases and how they benefit small business owners.
Who Benefits Most
100% bonus depreciation is especially powerful for:
Contractors and Trades: Tools, trucks, heavy equipment.
Clinics or Creative Studios: Diagnostic equipment, cameras, editing stations.
Service Businesses: Office furniture, delivery vehicles, technology upgrades.
If you’re unsure whether your purchase qualifies as a depreciable asset, revisit our explainer on the difference between a capital asset and an expense.
Action Steps Before Year-End
Review Your Wish List: What are you planning to buy in 2025 anyway?
Confirm Delivery & Setup: Must be in service by year-end.
Run Projections: Compare Section 179 vs. bonus depreciation with your CPA.
Look Beyond Depreciation: Don’t forget about other deductions—see our post on 10 small business tax deductions owners often miss.
Check Cash Flow: Deductions reduce taxes but don’t cover purchase costs.
Final Thoughts
Restoring 100% bonus depreciation is a win for business owners who act strategically.
Book a 30-minute year-end planning call with Misty Newsome CPA, and we’ll help you decide whether to invest now or later.
Related Resource: IRS Deadlines & Payment Tips: A Clear Guide for Taxpayers
