100% Bonus Depreciation and Section 179 in 2026: What the One Big Beautiful Bill Restored

Public Law 119-21 reached the Oval Office on July 4, 2025.^[1] The depreciation reset is among its most consequential business provisions. For tax planners, the headline is that the IRS depreciation guide now brings back the 100% special depreciation allowance for property acquired and placed in service after January 19, 2025.^[3]

In plain English, IRS newsroom guidance puts it this way: most qualifying business property bought and put into use after Jan. 19, 2025 can be deducted in full in year one rather than over the recovery period.^[2] For South Florida owners weighing year-end equipment buys, that single sentence flips the math on financed purchases and shortens payback windows.

Two flavors of property ride this restoration. The core rule covers qualified business property, including long production period property and certain aircraft, acquired and placed in service after January 19, 2025.^[3] Orchard-style growers get a parallel rule: a 100% allowance applies to the adjusted basis of certain specified plants bearing fruits and nuts planted or grafted after January 19, 2025.^[4]

There is an asymmetric transition window for plants. Specifically, a 40% allowance covers plants planted or grafted after December 31, 2024 but before January 20, 2025.^[8] If your grove crew finished a planting in that narrow grace period, you sit in the 40% lane, not the 100% one.

Yes. The depreciation guide spells out a taxpayer-side election: rather than taking the full 100% allowance, an owner can choose a 40% allowance (or 60% for long production period property and certain aircraft) for the property during the first tax year ending after January 19, 2025.^[7]

Why lean toward a smaller deduction? A few reasons recur. Some owners want to preserve depreciation deductions for later years when projected income brackets are higher. Others worry about state nonconformity, since several states decouple from federal bonus rules and an oversized federal hit can push the taxpayer into negative carryover territory at the state level. The 40% election is annual, so it pays to model the full multi-year impact before filing.

Section 179 lives alongside bonus depreciation, not instead of it. For property placed in service in tax years beginning in 2025, the Section 179 election generally cannot exceed $2,500,000.^[5]

For 2026, the limit climbs to $2,560,000. The phase-out for 2026 starts once cost-of-property crosses $4,090,000.^[9] For 2025, the phase-out threshold is $4,000,000: amounts above that figure reduce the allowable Section 179 dollar limit one-for-one, but not below zero.^[6]

Industries that buy heavy machinery, vehicles, qualifying interior improvements, and technology hardware feel this change most. Construction and contracting firms across construction + contracting tax help see the swing on a single financed dump truck or excavator: tens of thousands of dollars of tax cash shift into the year of purchase once the 100 percent allowance is back in play. The same lift applies to medical practices upgrading imaging suites, restaurant groups buying new kitchen lines, and trucking outfits cycling tractors.

If the business also has a domestic research or product-development spend, the change pairs with the R&D expensing reversal under the same law. See the Did OBBB restore Section 174A R&D expensing? explainer for that companion provision. Tying both pieces together is a planning conversation that benefits from running before the year ends, not during the return.