Bonus depreciation by placed-in-service date

The rate is set by the placed-in-service date

Bonus depreciation under §168(k) lets you deduct a percentage of the cost of qualifying short-life property in the first year it is placed in service. A cost segregation study is what creates that qualifying property: it identifies the portions of a building that belong in 5-, 7-, and 15-year recovery classes rather than sitting in the 39-year structural shell. Those reclassified components are bonus-eligible; the 39-year shell is not.

The single most important rule to understand is this: the bonus rate is set by the date the property was placed in service — not by the year you run the study, and not by the year you file. A warehouse placed in service in 2021 carries the 2021 rate even if the study is performed today.

That is why a lookback study still works. When you reclassify components on a property you have owned for several years, the catch-up deduction is computed through a §481(a) adjustment, and the bonus rate applied inside that computation is the rate that was in effect on the original placed-in-service date. The table below is therefore a date lookup, not a calendar of when you happen to be filing.

The timeline (and the 2025 split)

Find the placed-in-service date in the left column to read the federal first-year bonus rate that applies to qualifying property:

2025 is a split year. Property placed in service from January 1 through January 19, 2025 falls under the final step of the TCJA phase-down at 40%. Property placed in service on or after January 20, 2025 jumps back to 100%. There is no single rate for all of 2025 — the placed-in-service date within the year decides it.

Note also what is not on this table anymore. The old TCJA sunset would have dropped bonus to 20% in 2026 and 0% in 2027. That schedule no longer applies. For property placed in service in 2026, 2027, and beyond, the rate is 100% permanently.

What OBBBA changed

The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, permanently restored 100% bonus depreciation for qualifying property placed in service on or after January 20, 2025. It removed the scheduled step-downs that the TCJA had set in motion, so there is no sunset going forward — the 100% rate is now the standing rule rather than a temporary incentive.

OBBBA was not retroactive to the start of the year. Property placed in service during the January 1 through January 19, 2025 window still falls under the 40% TCJA step. For a warehouse acquired in that early-January window, the date on the closing or the in-service documentation is the whole story, and it is worth confirming with your CPA before assuming the 100% rate.

The current rules trace back to IRC §168(k) as amended by OBBBA, with the underlying recovery periods and conventions set out in IRS Publication 946. We rely on those primary sources rather than third-party summaries.

Why it matters on a warehouse

The placed-in-service rate matters more for warehouses than for almost any other property type, because of what reclassifies. A warehouse's short-life pool is dominated by 15-year land improvements — truck courts, concrete aprons, asphalt paving, yard work, site lighting, fencing, and drainage — alongside 5- and 7-year equipment such as racking power, specialty electrical, and material-handling support. All of it is bonus-eligible.

Because that reclassified pool is large relative to the building's modest interior finish, the bonus rate effectively multiplies a big number. Apply 100% to it and most of the reclassified basis lands in year one; apply 40% and the same components release far less in the first year. On a multi-million-dollar acquisition the difference between two placed-in-service dates a few weeks apart can be a substantial swing in the modeled year-one deduction.

• Every tax figure on this page is an estimated, modeled result. Your filed number depends on the actual placed-in-service date, your entity structure, and your facts.
• State conformity varies. Many states decouple from federal §168(k) and do not allow bonus depreciation, or allow it at a different rate. Federal and state outcomes can differ on the same property.
• The placed-in-service date and your CPA determine the figure that actually goes on the return. We model the engineering and the federal bonus rate; your tax advisor confirms how it applies to you.

If you want to see how this plays out on real warehouse numbers, walk through the example study, review what reclassifies in a warehouse, or read the deeper site improvements: the 15-year story breakdown.

More on the rule and the 2025 split: 100% bonus depreciation in 2025 at Cost Seg Smart.