100% Bonus Depreciation Is Back: What South Florida Businesses Should Know

Business owners in South Florida may have an important opportunity to accelerate tax deductions through the federal bonus depreciation rules.

Federal legislation enacted in 2025 restored permanent 100% bonus depreciation for certain qualifying business property acquired after January 19, 2025.

For companies investing in equipment, technology, machinery, and other eligible assets, the change can significantly affect federal tax planning.

What is 100% bonus depreciation?

Bonus depreciation allows businesses to deduct a qualifying percentage of the cost of eligible depreciable property in the year the property is placed in service.

With 100% bonus depreciation, eligible businesses can generally deduct the entire qualifying cost immediately instead of spreading deductions over multiple years.

This can reduce taxable income and potentially improve near-term cash flow.

What types of property qualify?

Depending on the circumstances, eligible assets may include computers, machinery, office equipment, furniture, and certain vehicles.

Some qualified improvements to nonresidential property may also be eligible.

The rules generally apply to eligible property with a federal depreciation recovery period of 20 years or less, along with certain other specified assets.

Some used property may qualify, but acquisition and related-party restrictions can apply.

Example: A Florida business purchases $100,000 in equipment

Consider a Fort Lauderdale-based company that purchases $100,000 in qualifying equipment and places it in service during 2027.

If the entire purchase qualifies for 100% bonus depreciation, the business may be able to deduct the full $100,000 in the applicable tax year.

That does not mean the company receives a $100,000 tax refund.

Instead, it reduces taxable income, with the financial benefit depending on the business's tax situation.

How does bonus depreciation differ from Section 179?

Both provisions can accelerate business deductions, but their requirements differ.

Section 179 is generally subject to annual deduction limits, an investment-based phaseout, and a taxable business income limitation.

Bonus depreciation follows separate eligibility rules and generally is not subject to the same taxable income limitation.

However, the best approach depends on the business's broader tax position.

Can real estate investors benefit?

Some real estate investors may benefit from bonus depreciation through qualifying components of rental or commercial property.

A cost segregation study may identify eligible shorter-lived components that can be depreciated more quickly than the building itself.

However, most building structures do not qualify directly for 100% bonus depreciation.

Rental activity limitations, passive loss rules, and potential depreciation recapture upon sale must also be evaluated.

Is immediate expensing always the best option?

Not necessarily.

Accelerating deductions can lower current taxes, but it also reduces depreciation deductions available in future years.

Businesses anticipating significant income growth may sometimes benefit from a different depreciation strategy.

The appropriate decision depends on profitability, financing arrangements, future tax rates, and long-term plans.

Business tax planning in Fort Lauderdale and South Florida

Before making major capital investments, businesses should review both the financial return and the potential tax treatment.

James Ridout CPA assists businesses and property investors throughout South Florida with tax preparation, depreciation planning, and business tax strategy. Schedule a consultation to evaluate your company's options.