How to Maximize 100% Bonus Depreciation Under the OBBB (Without Creating a Tax Hangover)

If you're a small business owner or self-employed professional, the return of 100% bonus depreciation under the OBBB could feel like a massive win. And in many ways, it is. But before you go out and finance a $90,000 SUV “for the tax write-off,” let’s break down what this really means—and how to leverage it without setting yourself up for regret down the road.

First, What Is 100% Bonus Depreciation?

Under the OBBB, 100% bonus depreciation is back—which means you can now deduct the full purchase price of qualifying business assets in the year they’re placed in service. That includes:

• Vehicles over 6,000 lbs (like that Cadillac Escalade or Range Rover)
• Equipment
• Computers
• Certain leasehold improvements

This accelerates your tax benefit instead of spreading it over several years.

Here’s where it gets interesting: bonus depreciation is automatic—unlike Section 179 (which we’ll cover in a second), you don’t have to elect it. If the asset qualifies and you’re not opting out, it’s taken.

So why does this matter? Because smart tax planning isn’t just about what you deduct this year… it’s about how you set yourself up long-term.

Depreciation ≠ Deduction (Important Distinction)

Many people conflate the two: “I bought this truck, so it’s a write-off, right?”

Not quite.

• Deduction is an expense that reduces your taxable income now (e.g., wages, advertising, rent).
• Depreciation is a systematic expense—a way to write off the cost of an asset over its useful life.

Bonus depreciation simply lets you front-load that expense instead of spreading it over five, seven, or 15 years.

But here's the kicker: just because you deduct 100% this year doesn’t mean the tax benefits are “free.”

You May Have to Pay It Back (a.k.a. Depreciation Recapture)

If you sell that vehicle or asset later, the IRS doesn’t forget.

They’ll say: “You wrote this off for tax purposes, but now you're selling it for money. Let's recapture some of those tax savings.”

This is called depreciation recapture—and it’s often taxed as ordinary income, not capital gains.

Translation? That $50,000 vehicle you wrote off and then sold for $30,000 down the road might come back to bite you with a surprise tax bill.

It’s not a reason to avoid depreciation, but it’s definitely a reason to plan for the entire lifecycle of the asset—not just the year of purchase.

The Popular “Buy a Vehicle to Get a Write-Off” Strategy

You’ve heard it. You’ve maybe even said it:

“I’m buying this G-Wagon to get a tax write-off before year-end.”

This is the classic Section 179 + bonus depreciation play. If the vehicle weighs over 6,000 lbs and is used at least 50% for business, you can:

1. Deduct up to the Section 179 limit (currently $30,300 for SUVs larger than 6,000 lbs *2025).

2. Apply bonus depreciation to the remaining cost basis.

Example:

• You buy a $90,000 SUV used 100% for business.
• Take a $31,300 Section 179 deduction.
• Apply bonus depreciation to the remaining $58,700.
• Total write-off = $90,000 in year one.

But don’t forget:

• If business use drops below 50% later, you may have to recapture some of the deduction.
• The resale or trade-in down the road could also trigger depreciation recapture income.

How to Maximize the Strategy (Without Shooting Yourself in the Foot)

Here’s how we guide the business owners we serve to get the most from bonus depreciation without creating a mess:

1. Coordinate With Your Bookkeeping and Payroll

Make sure your books reflect the purchase and depreciation correctly. Especially if you’re an S Corp—this needs to be reported on your business return, not just “written off” in your head.

2. Pair With Strategic Income Timing

If you’re having a high-income year (sold a property, had a cash windfall, or just crushed it in commissions), a big depreciation deduction can offset that spike. But in a low-income year? It might be better to opt out of bonus depreciation and spread it over time.

3. Know What Assets Qualify

Vehicles are the sexy example. But you can also use 100% bonus depreciation for:

• New business computers
• Office renovations
• Photography equipment
• Even used assets you buy from someone else

This is a chance to invest back into your business while reducing taxes—just don’t buy junk you don’t need.

4. Layer In Retirement and Entity Strategy

Want to take it further? Combine depreciation with:

• A Solo 401(k) to max out retirement savings
• S Corp salary optimization to reduce payroll taxes
• Entity-level tax planning (QBI, income shifting, Augusta Rule)

This is where real savings and wealth building happen—not just in the one-time write-off, but in a long-term integrated plan.

5. TL;DR — What You Really Need to Know

• 100% bonus depreciation is back.
• It lets you deduct the full cost of eligible business assets this year.
• But it’s not free money—you may have to recapture some of it later.
• Section 179 + bonus depreciation is a powerful combo for business vehicles.
• Work with a tax planner (hey, that’s us) to align asset purchases with your income, entity, and long-term goals.

Final Thought: Don’t Let the Tax Tail Wag the Dog

A $90,000 deduction sounds awesome… until you realize you didn’t actually need the thing you bought, and you’re still stuck with the monthly payments.

Our advice? Buy assets that will genuinely move your business forward—things that increase productivity, save you time, or drive new revenue.

Let the tax benefit be the cherry on top… not the reason for the purchase.