Is 100% Bonus Depreciation Back for My Startup in 2026?
My accountant just told me I left a six-figure deduction on the table. That is not a minor oversight.
If my startup bought equipment, hardware, or lab assets in 2025, this is a conversation worth having now.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. It restored 100% bonus depreciation for certain qualified property placed in service after that date. Under the prior TCJA phase-down, the rate was already at 40% for 2025. The OBBBA reset it to 100%. If my startup made capital investments in the second half of 2025, the tax picture changed.
What Bonus Depreciation Is and What the OBBBA Changed
The Basic Concept
Bonus depreciation allows a business to deduct a large portion (potentially up to 100%) of the cost of qualifying assets in the year they are placed in service. For a capital-intensive startup, that is a significant cash flow advantage. A $500,000 equipment purchase can translate into a full $500,000 deduction in the first year.
What the TCJA Phase-Down Did
The Tax Cuts and Jobs Act started a phase-down after 2022:
- 80% in 2023
- 60% in 2024
- 40% in 2025
- 20% in 2026 (under the old schedule)
The OBBBA eliminated that phase-down. For property placed in service after July 4, 2025, the rate is 100%.
What Qualifies for Bonus Depreciation
Eligible property means tangible depreciable business assets with a recovery period of 20 years or less:
- computer equipment and servers
- manufacturing and lab equipment
- office furniture and fixtures
- qualified improvement property (interior building improvements)
Land and standard building structures do not qualify. Software, servers, and lab hardware often qualify, depending on how they are classified. Confirm with a tax advisor before filing.
The July 4, 2025 Cut-Off Matters
Property placed in service before July 5, 2025 gets the 40% rate. Property on or after July 5, 2025 qualifies for 100%. If purchases cross that boundary, track the two groups separately. Mixing them can create reporting errors that may be flagged by the IRS.
Common Founder Mistakes
Mistake #1: Assuming the Phase-Down Still Applies
Many startups filed 2025 taxes at 40% for all purchases, not realizing the law may have changed mid-year. Signs this mistake may have happened:
- the tax return does not separate pre- and post-July 4 asset purchases
- depreciation was calculated at 40% for equipment bought in Q3 or Q4 2025
- no one reviewed the OBBBA before filing
An amended return may be worth discussing with a CPA.
Mistake #2: Not Separating Pre- and Post-July 4 Purchases
The OBBBA applies from July 5 forward, not all of 2025. The date of placement in service controls the rate, not the purchase date. Treating all 2025 purchases the same is the error.
Mistake #3: Waiting for the Accountant to Raise It
Tax advisors may not always flag mid-year legislative changes immediately. Raise this proactively with a CPA before filing or amending:
- which 2025 assets were placed in service after July 4
- whether 100% was applied to those assets
- whether an amended return is worth filing
Founders who already filed without the correct rate have not necessarily lost the deduction.
10-Minute Self-Check
☐ Did my startup place any tangible business property in service after July 4, 2025?
☐ Have I confirmed those assets qualify for bonus depreciation (20-year recovery period or less)?
☐ Did my 2025 tax return separate pre- and post-July 4 asset purchases and apply the correct rate to each?
☐ Have I reviewed whether an amended return is worth filing if the wrong depreciation rate was applied?
☐ Am I planning 2026 capital expenditures with 100% bonus depreciation factored into the decision?
☐ Is my CPA or tax advisor familiar with the OBBBA depreciation provisions?
If my 2025 return did not reflect the OBBBA rate, the deduction is not lost yet.
Bottom Line
The OBBBA restored 100% bonus depreciation for capital-spending startups. The cut-off is July 4, 2025. Property placed in service after that date qualifies. Founders who did not apply the new rate in their 2025 filings should discuss an amended return with their CPA before that window closes.
Want to Understand How the 2025 Tax Law Changes Affect My Startup?
Join us on May 5 with Jyothi Chillara, CPA, MST of Abbott, Stringham & Lynch.
Reserve your seat: https://primumlaw.com/2025-2026-tax-changes-for-startups/
Sources Used
- IRS, “How to Depreciate Property” (Publication 946) — https://www.irs.gov/publications/p946
- Grant Thornton, “One Big Beautiful Bill Act: Key Tax Provisions for Businesses” — https://www.grantthornton.com/insights/alerts/tax/2025/flash/irs-issues-final-regulations-on-stock-buyback-tax
- Cooley, “OBBBA Tax Changes: What Companies Need to Know” — https://www.cooley.com/news/insight/2025/2025-12-10-irs-finalizes-regulations-on-stock-buyback-excise-tax
- Bloomberg Tax, “Bonus Depreciation Restored to 100% Under OBBBA” — https://news.bloombergtax.com