Bonus depreciation went back to 100% and this time it is permanent. Below is the actual arithmetic, in full — and the one rule that decides whether a W-2 earner can use it at all. Read it before you book anything.
The mechanism
When you buy a rental property, the default is to depreciate the building over 27.5 years (residential) or 39 years (commercial). One slow, even line every year.
But a building is not one thing. It is carpet, cabinets, appliances, specialised electrical, fencing, landscaping, driveways. Under the tax code many of those components are not 27.5-year property at all — they are 5, 7 or 15-year property. A cost segregation study is an engineering report that goes through the building and documents which dollars belong in which class.
That reclassification on its own just moves depreciation earlier. Section 168(k) bonus depreciation is what turns it into a single large deduction: it lets you write off the entire short-life portion in the first year instead of spreading it. The One Big Beautiful Bill Act restored that to 100% and made it permanent, for property acquired and placed in service after January 19, 2025.
One thing the sales pitches tend to skip: this is timing, not forgiveness. You are pulling deductions forward, not inventing them. The same dollars would have been deducted anyway, just slowly over decades. And when you eventually sell, a portion of what you accelerated comes back as depreciation recapture — taxed on the way out. That can still be a very good trade, because money now is worth more than money in 2050 and your rate may differ by then. But it is a trade, not free money, and anyone who describes it as free money is selling you something.
Worked example
Illustrative only. Your components, and therefore your numbers, will differ.
A $200,000 deduction does not mean $200,000 back. It means $200,000 comes off your taxable income. At a 37% marginal rate that is roughly $74,000 of tax — not $200,000.
And the $20,000 is the cost of the study, not an investment that returns $200,000. Anyone presenting those two numbers as a return is misleading you.
Before you get excited
This is the part most ads leave out, so we will put it in the middle of the page. Under IRC §469 — Section 469 of the Internal Revenue Code — a rental is a passive activity. Losses from passive activities — including a big first-year depreciation deduction — generally cannot be used against W-2 wages. They are suspended and carried forward until you have passive income, or until you sell.
There is a $25,000 special allowance for actively participating landlords, but it phases out between $100,000 and $150,000 of modified AGI. Above $150,000 it is zero. If you are the $250K+ earner this page is written for, that allowance does not exist for you.
Usually will NOT work
Can work, if the facts hold
Which of those you fall into depends on hours, ownership structure, average stay length and income — facts, not marketing. That is the whole reason the first conversation is a qualification conversation: a large share of people who read this page should be told no, not this one, and we would rather say it in 20 minutes than after you have paid for a study you cannot use.
General information, not tax advice. i-taxplan is not your accountant and nothing here creates that relationship. Rules change and apply differently to every taxpayer — confirm your own position with a licensed professional before acting.
How it works
W-2 income, business structure, side income, assets. 5 minutes of context.
Which provisions apply, which don't, and why. No upsell.
Engage I-Taxplan, take the plan to your CPA, or do nothing.
*Both figures are statutory, not outcomes: IRC §168(k) as amended by the One Big Beautiful Bill Act, and the §469(i) phase-out. Neither predicts your result.
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