Bonus Depreciation Is Permanent Again: Reading Notice 2026-11 Before You File

Key takeaways

• OBBBA restored 100% bonus depreciation under IRC § 168(k) for qualifying property acquired and placed in service after January 19, 2025, and made full expensing permanent rather than phasing it down.
• Notice 2026-11, issued in January 2026, provides interim guidance taxpayers may rely on pending regulations.
• Property under a written binding contract entered before January 20, 2025 generally remains on the prior phase-down schedule, so the contract date — not just the in-service date — controls.
• Taxpayers may elect a reduced 40% rate for the first taxable year ending after January 19, 2025, which is sometimes the better answer when full expensing would strand other tax attributes.

What changed in the law

For several years, bonus depreciation was on a glide path to zero — 80% in 2023, 60% in 2024, declining each year thereafter. That schedule shaped a great deal of capital planning. It is no longer the governing rule.

OBBBA restored the deduction to 100% and made it permanent for qualifying property acquired and placed in service after January 19, 2025. The phase-down is gone. A business that buys and places qualifying equipment in service is again able to deduct the full cost in year one, and can plan on that treatment continuing rather than eroding annually.

What Notice 2026-11 supplies

A statutory change of this kind raises immediate mechanical questions: which acquisition date controls, what happens to property already under contract, and whether a taxpayer can opt for a lower rate. The IRS addressed these in Notice 2026-11, issued in January 2026, as interim guidance on which taxpayers may rely until regulations are finalized.

Three points from the guidance carry the most planning weight.

The acquisition-date line is January 19, 2025

The 100% rate applies to property acquired after January 19, 2025. Property acquired on or before that date falls under the prior, phasing-down regime. "Acquired" is not the same as "placed in service," which matters for the next point.

A binding contract before January 20, 2025 can disqualify the full rate

Property is generally treated as acquired when a written binding contract is entered. So equipment placed in service in 2025 or 2026 may still be tied to the old phase-down schedule if the binding contract predates January 20, 2025. The contract date, not the delivery or installation date, often determines the answer. This is the trap most likely to surprise a business that signed in late 2024 and took delivery later.

The 40% election exists for a reason

The guidance permits an election to apply a reduced 40% rate for the first taxable year ending after January 19, 2025. Electing a smaller deduction sounds counterintuitive. It is not. Full first-year expensing can create or enlarge a net operating loss, suppress the qualified business income base, or waste deductions in a low-rate year. For a business that expects higher rates ahead or that needs taxable income to absorb other attributes, a measured deduction can produce a better multi-year result than the maximum one.

How to think about it

Bonus depreciation is a timing benefit, not a permanent rate reduction. It accelerates deductions; it does not create them out of nothing. The right answer depends on the rest of the return.

The questions worth working through before filing: Does full expensing this year strand a § 199A deduction or push the business into a loss it cannot use efficiently? Is the property actually eligible, given the contract date? Does the multi-year cash-tax picture favor taking the full deduction now or spreading it? These are modeling questions, and they reward being asked before the return is filed, not after.

For property genuinely acquired after January 19, 2025 by a profitable business with no competing attributes, the analysis is short and the answer is usually full expensing. The cases that require care are the contract-date question and the situations where a maximum deduction undercuts something else.

Bottom line

Full bonus depreciation is back and, for the first time in years, durable. Notice 2026-11 confirms the mechanics and the lines that matter — particularly the acquisition-date test and the contract-date trap for property ordered in late 2024. The deduction is valuable, but it is not automatically the best election in every case. Run the multi-year numbers before the return is filed.