As currently outlined in the Tax Cuts and Job Act of 2017, bonus depreciation is on track to sunset by 2027. Weigh in with your opinion: Do you think the new administration will enact changes to bonus depreciation?
As of January 2025, bonus depreciation, the federal tax incentive that provides for businesses to immediately deduct a large percentage of the cost of qualified property continues a phase-out according to the following schedule:
• 2023: 80%
• 2024: 60%
• 2025: 40%
• 2026: 20%
• 2027 and later: 0%
Currently, a business can deduct 60% of the property’s cost upfront for property placed in service in 2024. The outstanding balance will be depreciated over the asset’s normal recovery period.
Without a crystal ball, we don’t know how future legislation will unfold, however, President Trump proposed to reinstate and make permanent 100% bonus depreciation during his 2024 campaign. With the potential return of 100% bonus depreciation, businesses would again be able to immediately deduct the complete cost of qualified property, bolstering investment and economic growth.
In addition, policymakers have suggested that the restoration of 100% bonus depreciation could be a priority in the upcoming legislative agenda. This move is anticipated to benefit sectors such as manufacturing and agriculture by reducing tax liabilities and promoting capital investment.
While all of this indicates a strong inclination towards reinstating full bonus depreciation, the implementation will depend on legislative processes and negotiations. Businesses should monitor these developments closely and consult with tax professionals to understand the potential implications for their operations and investment strategies.
O’Connor’s cost segregation team has the experience and background to advise commercial property owners on the latest developments in bonus depreciation. Our expertise includes:
• Navigating Legislative Changes: Staying updated on tax law changes, such as the phase-out schedule for bonus depreciation or potential legislative reversals.
• Maximizing Tax Benefits: Identifying assets eligible for bonus depreciation and ensuring that property owners take full advantage of current tax incentives.
• Tailored Consultations: Offering guidance on how changes in bonus depreciation may impact individual property investments and overall tax strategy.
• Timely Reporting: Providing comprehensive cost segregation studies that align with the latest federal tax regulations.
If you’re a commercial property owner, O’Connor can provide you customized insights into bonus depreciation rules and how to optimize your tax savings. We provide at no charge and with no obligation, a preliminary analysis that will estimate approximate savings for your assets. The analysis includes a firm cost quote, allowing you to project a payback ratio of savings versus study cost before you commit. Our state-licensed appraisers perform cost segregation studies servicing all 50 states as well as international clients. We’ve completed over 15,000 reports generating hundreds of millions of dollars in federal tax savings for our clients. Our team of cost segregation specialists is made up of experienced, trustworthy professionals providing:
• Outstanding Customer Service
• Quality Technical Work
• Undivided Cost segregation Focus
About O’Connor:
A market leader in real estate services since 1974, O’Connor has over 50 years of experience. Our cost segregation team provide studies for commercial clients calculating costs of property components and segregating each to the correct depreciation lives, generating hundreds of millions of dollars in federal income tax savings. Give us a call at 1-877-375-4291 to discuss your property.