📊 Business

Bonus Depreciation Calculator 2026 — Free

See how the OBBBA restores 100% first-year bonus depreciation for equipment, vehicles, and qualified improvement property. Compare old law phase-down vs. full expensing.

Total purchase price of the business asset Please enter a valid amount.
Must exceed 50% to qualify Enter a value between 1 and 100.
Your federal marginal income tax rate Enter a value between 0 and 37.

Bonus Depreciation Results

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Depreciable Basis
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Year-1 Depreciation (OBBBA 100%)
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Year-1 Depreciation (Old Law)
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Additional Year-1 Deduction
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Tax Savings (Year 1)
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Extra Savings vs Old Law

The OBBBA restores 100% first-year bonus depreciation for qualifying business assets placed in service in 2026 and beyond. Under prior law, the rate had phased down to just 20% for 2026.

How It Works

  1. Enter the total cost of the business asset
  2. Select the asset type and year placed in service
  3. Enter your business use percentage and marginal tax rate
  4. Review your first-year depreciation and tax savings
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Bonus Depreciation Under the OBBBA

The One Big Beautiful Bill Act (OBBBA) restores 100% bonus depreciation for qualified business assets placed in service after December 31, 2022. Under the Tax Cuts and Jobs Act of 2017, businesses could deduct the full cost of eligible assets in the first year. However, that provision began phasing down in 2023 — dropping 20 percentage points each year. The OBBBA reverses this phase-down entirely, retroactively restoring full first-year expensing.

What Changed

Before the OBBBA, businesses faced a declining schedule: 80% in 2023, 60% in 2024, 40% in 2025, and just 20% in 2026. This meant a business buying $100,000 in equipment in 2026 could only deduct $20,000 in year one under the old law. With the OBBBA, that same business can deduct the full $100,000 immediately — an $80,000 increase in the first-year deduction. For businesses planning capital expenditures, this change has a significant impact on cash flow and after-tax returns.

Old Law vs OBBBA Comparison

Year Placed in ServiceOld Law RateOBBBA RateExtra on $100K Asset
202380%100%$20,000
202460%100%$40,000
202540%100%$60,000
202620%100%$80,000

Vehicle Depreciation Limits

Passenger automobiles are subject to annual depreciation caps under IRC Section 280F. The first-year depreciation limit is $20,500 for vehicles placed in service in 2026 (with bonus depreciation). This cap applies to cars and light trucks under 6,000 lbs GVWR. Heavier vehicles — SUVs, pickups, and vans over 6,000 lbs — are exempt from the Section 280F limits and can qualify for full 100% bonus depreciation on the entire purchase price. For related business deductions, see our break-even calculator.

Qualified Improvement Property (QIP)

Qualified Improvement Property includes improvements to the interior of nonresidential buildings — such as renovations, flooring, lighting, HVAC, and security systems. QIP has a 15-year recovery period and is eligible for 100% bonus depreciation under the OBBBA. This is particularly valuable for retailers, restaurants, and office tenants making leasehold improvements. Structural components (enlargements, elevators, escalators, internal structural framework) do not qualify as QIP.

For informational purposes only. This calculator provides estimates based on the OBBBA provisions for bonus depreciation. Actual depreciation may depend on additional factors such as Section 179 elections, listed property rules, and state conformity. Consult a qualified tax professional before making financial decisions.

Frequently Asked Questions

What is bonus depreciation?
Bonus depreciation is a tax incentive that allows businesses to deduct a large percentage of the cost of eligible assets in the first year they are placed in service, rather than spreading the deduction over the asset's useful life. Under the Tax Cuts and Jobs Act of 2017, 100% bonus depreciation was available but began phasing down by 20% per year starting in 2023.
How does the OBBBA change bonus depreciation?
The One Big Beautiful Bill Act (OBBBA) restores 100% bonus depreciation retroactively for assets placed in service after December 31, 2022. This reverses the phase-down schedule that had reduced the rate to 80% in 2023, 60% in 2024, 40% in 2025, and would have reached 20% in 2026. Under OBBBA, all qualifying assets get full first-year expensing regardless of when they were placed in service.
Are vehicles eligible for 100% bonus depreciation?
Yes, vehicles are eligible for bonus depreciation, but passenger automobiles are subject to a first-year depreciation cap of $20,500 under IRC Section 280F. Vehicles over 6,000 lbs GVWR (such as SUVs and trucks used for business) are not subject to this cap and can qualify for full 100% bonus depreciation on the entire cost.
What is the business use requirement?
To qualify for bonus depreciation, the asset must be used more than 50% for business purposes. If business use is exactly 50% or less, the asset does not qualify for bonus depreciation at all. When business use exceeds 50%, the depreciable basis is calculated as the asset cost multiplied by the business use percentage.

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