H.R. 1, One Big Beautiful Bill (OBBB) Act, was passed by the House on May 22 and the Senate is still working on their version although the Senate Finance Committee released their tax provisions on June 16. There are lots of tax provisions in the bill! Just look at the House version's table of contents with tax changes running from SEC. 110000 to 112208 + SEC. 70301 modifying a multistate tax nexus provision from 1959.
Changes include extending many of the temporary provisions of the TCJA passed in December 2017, such as lower tax rates for individuals and a higher standard deduction. H.R. 1 brings back 100% bonus depreciation for eligible assets. Bonus depreciation had begun to phase down per TCJA terms to 80% starting in 2023, 60% in 2024 and 40% in 2025. See SEC. 111001
But I question what seems like an odd effective date for this depreciation change - eligible property acquired and placed in service after January 19, 2025 (so starting on Inauguration Day). Property placed in service on January 1 to January 19 gets 40% bonus depreciation. Generally bonus depreciation rules apply per calendar year even for fiscal year taxpayers. So, why not allow 100% for all of 2025 especially given that the 40% for the first 19 days is from the TCJA drafted by the same party drafting H.R. 1? And it would follow the general rule of having the same rule for an entire calendar year.
My query: What do you think - should we have 100% bonus for all of 2025 or only starting after January 19 and deal with 40% for the first 19 days? 100% versus 40% is a big difference in first year depreciation.
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