One Big Beautiful Bill (OB3) Bonus Depreciation for Business Assets

Applies only to assets acquired after January 19, 2025, and is permanent.

For assets placed in service between January 1 and January 18, 2025, the bonus depreciation is capped at 40%.

You can elect to have the bonus depreciation rate of 40% for one year, otherwise the 100% bonus depreciation is back in place.

This Bonus depreciation can be used to drive the business income into a loss, whereas the Section 179 deduction cannot drive the subject business activity into a loss.

Self-rental activities can take the Bonus Depreciation.

The short-term rental (STR) active participation loophole is still available for the bonus depreciation strategy.  This means that if you spent at least 100 hours of time during the year managing the short-term rental, then you can take bonus depreciation on all related assets with a class life of 15 years or less. 

We have to pay attention to whether we take Bonus Depreciation or Section 179 Deduction, as different rules apply to these 2 provisions.