The OBBBA (One Big Beautiful Bill Act) just made one of the biggest changes to business tax planning in years—and most small business owners don’t even know it yet. 100% bonus depreciation is BACK and it’s PERMANENT.
What Changed (And Why This Matters)
For those who haven’t been tracking the depreciation rollercoaster:
- 2023: 80% bonus depreciation (phase-down begins)
- 2024: 60% bonus depreciation
- 2025: 40% bonus depreciation
- 2026 and beyond: 100% bonus depreciation PERMANENTLY (thanks to OBBBA)
This isn’t just a temporary extension. Congress made it a permanent feature of the tax code. That fundamentally changes how businesses should think about capital purchases.
What Qualifies for 100% Bonus Depreciation?
The rules are generally consistent with prior bonus depreciation provisions:
- Tangible property with a recovery period of 20 years or less
- New AND used equipment (both qualify)
- Must be placed in service after January 19, 2025
- Examples: machinery, equipment, computers, vehicles, furniture
What DOESN’T qualify:
- Buildings (real property uses different rules)
- Land
- Property used outside the U.S.
- Certain vehicles over 6,000 lbs (luxury vehicle limits may apply)
The Business Decision Impact
Before permanence, there was always this pressure: “Buy before the percentage drops!” Businesses accelerated purchases to lock in higher deduction percentages. Now with 100% permanent, you can make capital investment decisions based on business need, not tax deadline panic.
The Tracking Challenge: Section 179 vs Bonus Depreciation vs Regular Depreciation
Here’s where it gets interesting for Beancount users. You now have THREE options for deducting equipment purchases:
1. Section 179 Expensing
- Deduction limit: $2,560,000 (2026)
- Phase-out begins: $4,090,000 in purchases
- Cannot exceed taxable income (can’t create a loss)
- Elective (you choose which assets)
2. Bonus Depreciation
- No dollar limit
- CAN create or increase NOL (net operating loss)
- Generally automatic unless you elect out
- More flexible for businesses with losses
3. Regular Depreciation
- Spread deduction over 5-7 years (depending on asset class)
- Sometimes preferable if you want to smooth income/deductions
How I Track This in Beancount
When a client purchases qualifying equipment, here’s my tracking approach:
2026-03-15 * "ABC Equipment Supply" "Industrial printer for business"
Assets:Equipment:Printer 50,000.00 USD
bonus-depreciation-eligible: TRUE
placed-in-service: 2026-03-15
cost-recovery-period: "5-year property"
depreciation-election: "100% bonus"
Assets:Checking -50,000.00 USD
Then for the tax deduction:
2026-12-31 * "Tax: Bonus depreciation deduction"
Expenses:Tax-Deductions:Depreciation 50,000.00 USD
asset-reference: "Assets:Equipment:Printer"
Income:Tax-Benefit -50,000.00 USD
The metadata is critical: you need to track placed-in-service dates, not just purchase dates, because the deduction happens in the year the asset is USED, not purchased.
When to Elect OUT of Bonus Depreciation
Counterintuitively, sometimes you DON’T want the 100% deduction:
- If you’re in a loss position: Creating/increasing an NOL might not help if you can’t use it
- If you expect higher future tax rates: Better to depreciate over time when rates are higher
- If you want to smooth income: Regular depreciation provides steady deductions
Beancount lets you track these elections with metadata like @depreciation-election: "5-year MACRS" if you elect out.
My Question to the Community
How are other tax professionals and bookkeepers tracking bonus depreciation elections in Beancount?
Specifically:
- Do you track the tax benefit calculation separately or integrate it into the ledger?
- How do you handle the “what-if” analysis when clients ask “should I elect out?”
- Anyone building Python scripts to calculate optimal depreciation strategy?
The permanence of 100% bonus depreciation is great news for businesses, but it adds another layer of planning complexity. Would love to hear how others are handling this.
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