Accelerated Depreciation (and What Changed in 2025)
August 19, 2025
By Ashley Didesch, CPA
SALT Manager
If your business is planning to invest in new assets this year, there is good news. Two powerful tax tools, Section 179 and bonus depreciation, just got a major upgrade thanks to new legislation passed this summer.
Section 179 Depreciation
Section 179 lets businesses immediately expense the full cost of qualifying property in the year it's placed in service rather than depreciating it over several years. However, there are limits:
- A maximum deduction limit (previously $1.22 million in 2024, now expanded to $2.5 million for assets placed in service after Dec. 31, 2024)
- A phaseout threshold that reduces the deduction once total qualifying asset purchases exceed a certain amount (previously $3.05 million in 2024, now increased to $4 million)
- The deduction is limited to taxable income and is only available to businesses actively engaged in a trade or business
Bonus Depreciation
Bonus depreciation allows businesses to deduct a percentage of the cost of eligible property in the first year—even if the business is operating at a loss. Unlike Section 179, it has no maximum deduction or threshold. Bonus depreciation was at 60% in 2024 and was set to phase down to 40% in 2025, but that is no longer the case. Starting with property acquired and placed in service after Jan. 19, 2025, businesses can once again deduct 100% of the cost in year one. Furthermore, this change to 100% bonus depreciation was made permanent with no future phasedown.
What This Means for You
Whether you're a small business or a large enterprise, these updates open the door to serious tax planning opportunities. While both Section 179 and bonus depreciation now allow for 100% expensing in the first year, keep in mind not all states conform to federal depreciation law. Check in with your tax advisor to make sure you’re maximizing your savings in 2025 and beyond.
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