Key Takeaways:
- Bonus depreciation 2025 restores a full 100% deduction for qualifying equipment placed in service after January 19, 2025.
- Updated bonus depreciation rules let businesses combine Section 179 and bonus depreciation for stronger, more flexible tax savings.
- Financing equipment through EFS helps businesses secure needed assets, preserve cash flow, and meet year-end in-service deadlines.
The acquisition of new or used business equipment can be a game-changer for your growth, and thanks to powerful tax incentives, it can also be a significant benefit to your bottom line.
Bonus depreciation 2025 is a key tax incentive that allows businesses to write off up to 100% of equipment purchases in the year they’re placed in service, rather than expensing the cost through gradual depreciation over many years. However, the One Big Beautiful Bill Act (OBBBA) has updated the bonus depreciation rules in 2025, making it crucial to plan your purchases strategically now.
EFS is here to partner with you, helping business owners finance the assets they need to capitalize on these powerful tax advantages responsibly.
The Basics of Bonus Depreciation
Bonus depreciation 2025 is an accelerated write-off that may allow businesses to deduct a large portion of the cost of eligible property in the first year it is put into use. This differs from standard depreciation, where gradual deductions are taken over the asset’s useful life (also known as straight-line depreciation). The intent of the incentive is clear: to encourage immediate investment in business equipment and stimulate the U.S. infrastructure and economy. Importantly, both new and used equipment may qualify for this benefit, provided the equipment is “first use” by the taxpayer.
The Bonus Depreciation Rate for 2025
The most critical element of the 2025 bonus depreciation is the rate itself. Under previous IRS rules, the deduction percentage was scheduled to phase down — 40% in 2025, 20% in 2026, and 0% thereafter. But thanks to the One Big Beautiful Bill Act, that timeline has been dramatically reversed.
The updated and bonus depreciation percentage for 2025 through 2030 is now back to 100% for qualifying property placed in service after January 19, 2025. That’s a full restoration of the top benefit, allowing businesses to immediately deduct the entire cost of eligible equipment in the year it’s put to work. For property placed in service between January 1 and January 19, 2025, the rate remains at 40%.
In other words, if you purchase and start using a piece of equipment for $50,000, you may be able to deduct the full purchase price — 100% of the cost — right away. With bonus depreciation 2025 reinstated at this powerful level (after dropping to 80% in 2023 and 60% in 2024), acting quickly and planning your equipment purchases strategically can make a meaningful impact on your tax savings this year.
What Equipment Qualifies for Bonus Depreciation?
To qualify for bonus depreciation rules in 2025, the property must be tangible business personal property used in your trade or business. This commonly includes heavy machinery (like excavators and bulldozers), commercial vehicles, computers, and office furniture.
The single most important timeline rule is that the equipment must be placed in service before December 31 to qualify for the deduction at the applicable rate in the current year. Remember that financing the asset does not affect eligibility; it only helps you get the equipment purchased. Ownership and the “in-service” timing are what matter most for the tax filing.
What Doesn’t Qualify
While bonus depreciation is broad, some common exclusions exist. Real estate, equipment acquired from a related party (like a spouse or business partner), and property used outside the U.S. do not qualify. To ensure you meet the bonus depreciation 2025 percentage requirements and all other criteria, always verify eligibility with your certified tax professional before filing.
How Bonus Depreciation Differs from Section 179
The comparison between bonus depreciation vs. section 179 is essential to understand for strategic tax planning. Both incentives allow for accelerated deductions, but they operate differently: Section 179 is subject to strict annual dollar limits and must be actively elected by the taxpayer, whereas bonus depreciation has no dollar limit and is automatic if qualifying property is purchased.
| Feature | Bonus Depreciation | Section 179 |
| Deduction Limit | No dollar limit | Subject to IRS cap (e.g., $2.5M in 2025) |
| Equipment Type | New or used | New or used |
| Applies Automatically? | Yes | No (must elect) |
| Ownership Requirement | Yes | Yes |
Remember to consult with your tax professional to ensure these elections apply to your business.
Why Many Businesses Use Both
Many financially savvy businesses choose to combine both methods. Typically, they will first apply the Section 179 deduction up to its cap, and then apply bonus depreciation to any remaining eligible cost of the equipment. EFS helps clients plan equipment purchases in a way that supports the flexibility and provides the cash needed to purchase equipment and claim both benefits, as well as save on taxes and drive long-term business growth.
How Financing Helps Maximize Bonus Depreciation
One of the greatest advantages of using EFS equipment financing is that you can purchase and place equipment into service before the year-end deadline while preserving your vital working capital. EFS financing is structured to make your business the owner. Ownership, not the payment method, determines eligibility for bonus depreciation. This means you can get the equipment generating revenue and tax savings right away.
Smart Planning for Tax-Savvy Growth
Strategic year-end equipment purchases are non-negotiable for maximizing tax advantages. EFS’s fast approval process is designed to help small businesses close deals and take delivery quickly, ensuring the equipment is “placed in service” before the deduction window for the bonus depreciation rules in 2025 ends.
Finance now, deduct in 2025, and keep your business moving while reducing taxable income.
Plan Now for the 2025 Phase-Out
The bonus depreciation 2025 percentage has been reinstated to 100% permanently under the OBBBA, with no scheduled phase-down. This is now a permanent 100% benefit. Proactive planning now is important to secure the highest possible deduction rate while it’s still available.
Talk to Your Accountant Before You File
EFS helps you finance equipment, not file taxes. We encourage joint planning between your accountant and EFS to make the most informed purchasing and deduction decisions. Use our rapid pre-approval process to lock in your financing and then work with your tax professional to finalize the deduction details.
Turn Equipment Investments Into Tax Advantages
Bonus depreciation 2025 supports business growth, preserves cash flow, and rewards strategic investment. Position your business for success by acting before the deduction rate phases out further. Partner with EFS to gain the financing you need to capitalize on these opportunities before the year-end deadlines.
Apply for Equipment Financing Today → Get Ready for 2025 Deductions.
Disclaimer: This content is for informational purposes only and does not constitute tax advice. Consult your accountant or tax professional for guidance specific to your business.
