Tax season is usually a slow-motion car crash, but this year? It's more like a sudden U-turn. Honestly, if you haven't looked at the bonus depreciation 2025 news October updates, you're probably working with information that’s basically extinct.
The big story everyone missed—or at least misinterpreted—is how the "One Big Beautiful Bill" (OBBB), signed on July 4, 2025, completely flipped the script on the planned phase-down. We were supposed to be at 40% right now. Instead, we're back to 100%, but there is a massive catch regarding the date you signed your contracts.
The 100% Comeback and the Jan. 19 Cutoff
For the last few years, we’ve been watching bonus depreciation die a slow death. It dropped from 100% to 80% in 2023, then 60% in 2024. The 2025 tax year was supposed to be the 40% year.
Then July happened.
The OBBB Act (Public Law 119-21) didn't just bump the rate; it made 100% bonus depreciation a permanent fixture of the tax code. But here's the kicker: it’s not retroactive to the very start of 2025 for everyone.
If you bought equipment or a vehicle between January 1 and January 19, 2025, you are stuck with the old 40% rate.
If you acquired and placed that same asset in service on or after January 20, 2025, you get the full 100% write-off. That nineteen-day window is a landmine for small business owners who rushed to buy gear on New Year’s Day.
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Why Your Binding Contract Is a Problem
I’ve seen a lot of people think they can "game" the system by pointing to a delivery date in late 2025. It doesn't work like that. The IRS is being extremely picky about "written binding contracts."
"If a written binding contract for the acquisition of property is in effect prior to January 20, 2025, the property is not considered acquired after the date the contract is entered into."
Basically, if you signed the paperwork on January 15, but the machinery didn't show up at your warehouse until October, you’re likely still limited to 40%. The law treats the "acquisition" as happening when you legally committed to the purchase, not when the truck pulled into your driveway.
This is causing huge headaches for people in aviation and heavy construction where "long-lead-time" assets are the norm. You might be looking at a multi-million dollar difference in your tax liability just because of a signature date.
The $2.5 Million Section 179 Synergy
While bonus depreciation is the headline act, Section 179 got a massive boost too. For 2025, the maximum deduction for Section 179 is now $2.5 million.
Why does this matter if bonus is at 100%?
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Flexibility.
Bonus depreciation is generally "all or nothing" for a specific class of assets. If you take it for one 5-year asset, you take it for all of them. Section 179 is more like a scalpel. You can pick and choose exactly how much you want to deduct to hit a specific taxable income target.
Plus, the phase-out threshold for Section 179 was bumped to $4 million. If you're a mid-sized operation spending $5 million on new equipment, you can’t use Section 179 for the whole thing, but you can still use bonus depreciation for whatever 179 doesn't cover.
Real-World Math: The 2025 Equipment Buy
Let's say you bought $3 million in manufacturing equipment this month (October 2025).
- Step One: You apply Section 179 to the first $2.5 million.
- Step Two: You apply 100% bonus depreciation to the remaining $500,000.
- The Result: You write off the full $3 million in year one.
If you’re in a 21% corporate tax bracket, that’s $630,000 in immediate cash savings. That’s money you can use to hire more people or finally fix that leaky roof in the warehouse.
The "Qualified Production Property" Wildcard
There’s a new player in the 2025 news cycle called Qualified Production Property (QPP).
This is a specific 100% deduction for the actual building or facility used for manufacturing. Usually, you have to depreciate commercial buildings over 39 years. That’s a long time to wait for a tax break.
Under the OBBB, if you start construction on a new manufacturing facility after January 19, 2025, you might be able to expense the whole thing (excluding the land) in the first year. The IRS is still supposed to release final guidance on this by early 2026, but the "intent to build" and the "start of construction" are the metrics to watch right now.
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Practical Steps for the End of Q4
You have roughly two months left in the year. If you're sitting on cash and need to lower your 2025 tax bill, the "placed in service" rule is your absolute deadline.
- Verify the "Ready for Use" Date: Just having the equipment in a box doesn't count. It has to be "ready and available for its specifically assigned function." If it’s not hooked up and capable of running by December 31, you get zero bonus depreciation for 2025.
- Audit Your January Purchases: Go back to your January invoices. If anything was bought before the 20th, flag it. You’ll only get 40% on those items, and your estimated tax payments might be off.
- Run a Cost Segregation Study: If you bought or renovated real estate this year, don't just lump it all into "39-year property." A cost seg study can break out the 5, 7, and 15-year components (like specialized wiring or landscaping) that qualify for that 100% bonus rate.
- Watch the State Conformity: This is the part that sucks. Just because the Fed says you get 100% doesn't mean your state does. Many states "decouple" from federal bonus depreciation rules. You might have a $0 federal tax bill and still owe your state thousands.
The permanent reinstatement of 100% bonus depreciation is a massive win for capital-heavy businesses, but the transition rules in 2025 are a minefield. Double-check your contract dates before you file your extensions or finalize your year-end purchases.