A corporation acquires and places in service qualified new equipment on March 1, 2025. Under IRC Section 168(k) as amended by the One Big Beautiful Bill Act, enacted July 4, 2025, what percentage of the equipment's cost may the corporation claim as first-year bonus depreciation?
- 40%, continuing the phase-down schedule that had been scheduled to apply to property placed in service during 2025 before the One Big Beautiful Bill Act was enacted
- 60%, the rate that applied to property placed in service during 2024 under the pre-existing phase-down schedule
- 100%, because the One Big Beautiful Bill Act permanently restored full expensing for qualified property acquired after January 19, 2025, repealing the prior phase-down for such property
- 80%, the rate that applied to property placed in service during 2023 under the pre-existing phase-down schedule
Why C? And why not the others?
Correct answer: C. 100%, because the One Big Beautiful Bill Act permanently restored full expensing for qualified property acquired after January 19, 2025, repealing the prior phase-down for such property
The One Big Beautiful Bill Act amended IRC Section 168(k) to permanently reinstate 100% bonus depreciation, with no future scheduled phase-down, for qualified property acquired after January 19, 2025; equipment acquired and placed in service in March 2025 satisfies that acquisition-date test and therefore qualifies for full first-year expensing of its cost. The option stating 40% reflects the rate that the original Tax Cuts and Jobs Act phase-down schedule had scheduled for property placed in service during 2025, stepping down twenty percentage points per year from 100% in 2022, a schedule the new law repealed for property acquired after its January 19, 2025 cutoff. The options stating 60% and 80% each state rates from that same repealed phase-down schedule, but for earlier placed-in-service years, 2024 and 2023 respectively, neither of which governs equipment acquired after the new law's effective date.
Source: IRC Section 168(k), as amended by the One Big Beautiful Bill Act, Pub. L. 119-21 (2025)