If you’ve bought equipment, machinery, vehicles, or made improvements to your building recently, you’ve probably heard that Washington brought back “100% bonus depreciation” for good. It’s true, and it’s a big deal — but the more interesting question for most of our clients isn’t whether to use it. It’s how much of it to use, and when.
The Quick Version
Under the tax law passed last year, businesses can once again write off the full cost of most qualifying equipment and property in the year they buy it, as long as it was purchased after January 19, 2025. Before this change, that bonus write-off was scheduled to keep shrinking every year until it disappeared. Now it’s back to 100%, and it’s permanent — no more countdown clock.
This is different from the Section 179 deduction you may already be familiar with. Section 179 has a dollar cap and can’t push your business into a loss. Bonus depreciation has no cap, and it absolutely can create a loss on paper — which sounds great until you think through what that loss actually does for you.
Why “take the biggest deduction possible” isn’t always the right call
It’s tempting to assume more deduction is always better. In practice, three things can make that backwards:
Connecticut doesn’t play along the same way the IRS does. Connecticut has historically required businesses and individuals to add back federal bonus depreciation and recover it gradually over several years on the state return, rather than allowing the full write-off immediately. If your business operates in multiple states, this gets more complicated — several other states, including New York and New Jersey, have their own versions of the same disconnect. The result: what looks like one deduction on your federal return can turn into two different depreciation schedules to track for years to come.
A deduction is only as valuable as the income it offsets. If bonus depreciation pushes your business into a loss this year, that loss doesn’t just vanish — it has to be carried forward and used against future income, under rules that can limit how much of it you can use in any given year. If this year happens to be a slow one and next year looks stronger, taking a smaller deduction now and a larger one later might actually save you more in real dollars.
There’s a newer, narrower option worth knowing about too. The same law also created a 100% write-off specifically for certain new construction or major upgrades to facilities used in manufacturing and similar production activities, as long as the property stays in that use for at least ten years. If you’re planning a facility expansion, this is worth a conversation before you break ground, not after.
The Bottom Line
Bonus depreciation isn’t a switch you flip on or off — it’s an election you can shape to fit your business, including deferring or opting out of it entirely for some or all of your purchases. The right choice depends on your income this year versus next, whether you operate in more than one state, and what you’re planning to buy or build over the next few years.
None of this is a reason to avoid the deduction — it’s a reason to plan it deliberately instead of defaulting to the maximum. The right time to weigh these tradeoffs is before a return is filed, while every option — full bonus, a partial election, or opting out for certain assets — is still on the table. Once that election is made, undoing it means amending a filed return rather than simply adjusting a plan still in motion.
