Bonus Depreciation in 2026: What Founders Should Know About CapEx Timing

December 2, 2025
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When the law changes, the smartest business owners adapt their capital-expenditure strategy. With the passage of the One Big Beautiful Bill Act (OBBBA) in mid-2025, depreciation rules have shifted. This gives founders a renewed opportunity to accelerate deductions and improve cash flow in 2026 and beyond.

Under OBBBA, 100 percent bonus depreciation is permanently restored for most qualifying business assets placed in service after January 19, 2025. This reverses the schedule under previous law, which had gradually phased out bonus depreciation through 2027 (dropping to 20 percent by 2026).

“Qualifying property” generally includes tangible personal property—such as equipment, machinery, furniture, computers, vehicles and similar assets. Under OBBBA, many of these purchases can now be fully expensed in the year they’re placed in service, rather than depreciated over time.

Why This Matters for Founders in 2026

  • Improved cash flow and lower taxable income: By expensing the full cost of equipment, tools and other qualifying assets immediately, businesses can reduce taxable income in the year of purchase. This can help conserve cash during growth, expansion or transition phases.
  • Clearer capital planning: Because 100 % bonus depreciation is now permanent (rather than phasing out), founders can design longer-term CapEx strategies without worrying about a shrinking window for deductions.
  • Flexibility for real estate-adjacent investments: In addition to traditional equipment, the OBBBA expands the definition of eligible property in certain cases. This includes “qualified production property” under the new provision for some building- or facility-related investments. These investments may also benefit from full expensing (subject to qualifying criteria).

What Founders Should Do Now

  1. Review the timing of any planned asset purchases or upgrades. If you anticipate investing in equipment, vehicles or other depreciable property in 2026 (or later), now is the ideal time. You can deduct 100% immediately, improving first-year cash flow.
  2. Coordinate CapEx with your overall tax strategy. If you expect strong revenue or a large taxable event, bunching CapEx in a year with bonus depreciation can help offset taxable income.
  3. Consult with your tax advisor on eligibility and election choices. While OBBBA restored 100 % bonus depreciation, certain assets may require careful documentation (purchase and service dates, usage). In addition, you have the option to elect out of bonus depreciation for specific property classes if desired.
  4. Don’t overlook Section 179. The law also boosts Section 179 expensing limits, creating additional opportunities for smaller businesses to immediately write off qualifying property.

How to Best Utilize Bonus Depreciation

For founders expecting to make major capital investments, 2026 (and beyond) offers a favorable tax landscape. This is thanks to OBBBA’s permanent restoration of 100 percent bonus depreciation. By timing and structuring CapEx wisely, business owners can accelerate deductions, conserve cash flow and build a stronger foundation for future growth.

For more information and tax planning strategies to benefit your business, contact the team at Illumination Wealth today.

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