What Is the Bonus Depreciation Rate for 2025?

Updated for tax year 2025 (filed in 2026) · IRS-sourced

For tax year 2025, the federal bonus depreciation rate is generally 40% for qualified property placed in service during the year. This rule applies to eligible business property under the phasedown schedule in Internal Revenue Code section 168(k).

The bonus depreciation rate for tax year 2025 is generally 40% for qualified property placed in service in 2025. This is separate from the Section 179 deduction, which has different limits and rules.

2025 bonus depreciation rate

For most taxpayers, the bonus depreciation rate for property placed in service in 2025 is 40%. Bonus depreciation is also called the additional first-year depreciation deduction under section 168(k).

This deduction lets a business write off a percentage of the cost of qualified property in the first year, instead of recovering the full cost over several years. The percentage has been phasing down, so 2025 uses a lower rate than earlier years.

The source chunks provided include the section 168(k) regulations confirming the bonus depreciation framework, while the annual revenue procedures in the record focus more on inflation-adjusted items like Section 179.

How bonus depreciation differs from Section 179

Bonus depreciation and Section 179 are not the same tax break. Bonus depreciation uses a percentage of the cost of qualified property, while Section 179 is an election to expense eligible property up to a yearly limit.

For tax year 2025, Rev. Proc. 2024-40 lists the Section 179 limit as $1,250,000 for taxable years beginning in 2025, with a phaseout beginning when total qualifying property placed in service exceeds $3,130,000. The same revenue procedure also lists a sport utility vehicle limit of $31,300 for 2025.

Rev. Proc. 2025-32 later explains that OBBBA amendments changed Section 179 for taxable years beginning after December 31, 2024, but the provided chunks do not directly state a new 2025 bonus depreciation percentage. So the bonus depreciation answer comes from section 168(k) law and regulations, not from the Section 179 inflation tables.

When the 40% rate applies

The 40% rate generally applies based on when qualified property is placed in service, not just when you buy it. In other words, the asset usually must be ready and available for its intended business use during 2025.

Whether property qualifies depends on the specific section 168(k) rules, including property type and acquisition requirements. Not every business asset qualifies automatically, and some property categories have special rules.

If property does qualify, you generally compute bonus depreciation first-year treatment under the section 168(k) rules and then continue depreciating any remaining basis under the normal depreciation method.

Bottom line for 2025 filers

If you are asking only for the federal bonus depreciation percentage for tax year 2025, the short answer is 40%. That is the general phasedown rate for qualified property placed in service in 2025.

You may also want to compare bonus depreciation with other write-off options, especially Section 179. Depending on the asset, business income, and timing, one approach may be better than the other, or both may be used in a coordinated way.

Frequently Asked Questions

What is the federal bonus depreciation rate for 2025?

For tax year 2025, the general federal bonus depreciation rate is 40% for qualified property placed in service in 2025. The provided IRS regulation source is 26 CFR § 1.168(k)-1, which covers the additional first-year depreciation deduction framework.

Is bonus depreciation the same as Section 179?

No. Bonus depreciation under section 168(k) is different from the Section 179 election. Rev. Proc. 2024-40 gives 2025 Section 179 amounts, including a $1,250,000 limit and a $3,130,000 phaseout threshold, but those are not the bonus depreciation rate.

Does the asset have to be bought in 2025 to get the 40% rate?

Usually, the key date is when qualified property is placed in service in 2025, meaning it is ready and available for its intended use. The governing authority for bonus depreciation is section 168(k) and its regulations, including 26 CFR § 1.168(k)-1.

Did Rev. Proc. 2025-32 change the 2025 bonus depreciation rate?

Not based on the provided chunks. Rev. Proc. 2025-32 discusses updated Section 179 rules and other items, but it does not provide a new 2025 bonus depreciation percentage in the excerpts given.

What Section 179 number applies for 2025 in the provided IRS material?

Rev. Proc. 2024-40 states that for taxable years beginning in 2025, the Section 179 limit is $1,250,000, with a reduction when the cost of Section 179 property placed in service exceeds $3,130,000.

Why is the answer based partly on general tax law instead of the revenue procedure chunks?

Because the provided revenue procedure chunks mainly list inflation-adjusted amounts such as Section 179 limits, while bonus depreciation is governed by section 168(k) and its regulations. The provided regulation source, 26 CFR § 1.168(k)-1, confirms the bonus depreciation framework, and the 2025 general phasedown rate is 40%.