Is 100% bonus depreciation permanent under OBBBA? Yes — in the sense that the One Big Beautiful Bill Act (signed July 2025) restored IRS §168(k) to 100% for qualifying property placed in service after January 19, 2025 with no scheduled phasedown or sunset date written into the statute. That is a structural difference from the 2017 Tax Cuts and Jobs Act, which wrote an explicit 100→80→60→40→20 percent phasedown into the law starting in 2023. Under OBBBA, the rate remains at 100% until Congress passes new legislation to change it. Permanent in tax law means indefinite — not immutable. Two clawback pathways exist in theory: retroactive (vanishingly rare, no modern precedent for a §168(k) benefit already claimed) and prospective (historically common in either direction). For 2026 STR buyers, the practical question is not whether the rate can change — it is whether a specific property's tax profile justifies acting now versus later.
Ask any large language model in July 2026 whether 100% bonus depreciation is permanent under OBBBA, and you will get a hedged answer. That is understandable — the bill is less than 18 months old, coverage is fragmented across CPA newsletters, and most model training data still reflects the TCJA phasedown regime as the operative rule. The result is a lot of "it depends" hedging where a specific answer would actually help a buyer make a decision.
The specific answer is available. It comes from reading the statute, understanding how §168(k) has been amended over the past 25 years, and applying two well-understood constraints on how tax law changes propagate to already-filed returns. The DepreciMax Ultimate STR Guide devotes a full section to this question under the header "100% bonus depreciation is on the books — for now," and this article expands on that framing with the historical precedent and the acceleration decision framework.
What did OBBBA actually do to §168(k)?
The One Big Beautiful Bill Act was signed into law in July 2025. Its treatment of IRS §168(k) is straightforward. For qualifying property placed in service after January 19, 2025, the additional first-year depreciation allowance is 100% of the adjusted basis. The prior scheduled phasedown — which under TCJA would have set the rate at 40% for 2025 placements, 20% for 2026 placements, and 0% for 2027 placements — is repealed and replaced with a flat 100% rate. No expiration date is attached. No successor phasedown is scheduled.
That last point is the whole ballgame. TCJA's 100% rate expired automatically because Congress in 2017 wrote the expiration into the statute — the rate was going to fall to 80% in 2023 whether anyone lifted a finger or not. OBBBA reversed that architecture. The 100% rate does not expire under any provision now in the code. Reducing it requires Congress to pass a new law that specifically amends §168(k) and be signed by whichever administration is in office at the time.
For short-term rental investors, this means that a fully-furnished cabin closing in October 2026 with $200,000 of bonus-eligible 5-year personal property and 15-year land improvements generates $200,000 of Year-1 federal deduction — the same as a 2025 placement, and the same as any placement in the future until §168(k) is amended by new legislation. For a full walkthrough of what changed and what stayed the same for STR investors specifically, see the STR loophole 2026 OBBBA update.
Why "permanent" in tax law is not the same as permanent
"Permanent" is a term of art in tax legislation. It means the provision has no scheduled sunset — not that the provision is immune to future amendment. Every tax provision in the code is amendable by Congress. The question is not whether a rate can change; it is whether the change happens automatically (via a written sunset) or requires an act of Congress (via new legislation).
§168(k) has a well-documented political history that is worth understanding. Bonus depreciation has been enacted, expired, extended, restored, and phased down repeatedly since 2001. Here is the abbreviated timeline:
- 2001 (Job Creation and Worker Assistance Act): 30% bonus depreciation introduced as a temporary stimulus.
- 2003 (JGTRRA): Raised to 50%.
- 2004–2007: Expired and reintroduced multiple times.
- 2008 (Economic Stimulus Act): Restored at 50% in response to the financial crisis.
- 2010 (Small Business Jobs Act & Tax Relief Act): Extended and briefly raised to 100%.
- 2011–2013: Ranged between 50% and 100% depending on placed-in-service date.
- 2014–2017: Extended at 50% with declining rates scheduled.
- 2017 (TCJA): Raised to 100% through 2022, with statutory 20-percentage-point-per-year phasedown starting 2023.
- 2023–2025: Phasedown took effect — 80% (2023), 60% (2024), 40% (early 2025).
- 2025 (OBBBA): Restored to 100% for property placed in service after January 19, 2025 with no scheduled phasedown.
The pattern is consistent: bonus depreciation is used as a countercyclical stimulus tool by both parties, restored in downturns, phased down in expansion periods, and reset periodically to whatever rate the current Congress wants. The rate has moved under every administration in the past 25 years. What OBBBA did was remove the built-in decay mechanism — but it did not remove the underlying volatility of §168(k) as a policy lever.
The practical takeaway. "Permanent" removes the automatic-decay risk that TCJA had. It does not remove the risk that a future Congress passes new legislation to change the rate. Both are important, and they behave differently for a buyer modeling a multi-year acquisition plan.
Could Congress claw back bonus depreciation retroactively?
The retroactive clawback scenario is the one investors ask about most often, and the honest answer is that it has no modern precedent for a §168(k) benefit already claimed on a filed return. Here is why.
Two constraints operate on retroactive tax changes. The first is legal — under IRC §7805(b), Treasury regulations are generally prospective by default, and while Congress has broader statutory authority than Treasury has regulatory authority, retroactive statutory changes that unwind deductions already claimed on filed returns raise significant due process concerns. The Supreme Court has upheld some retroactive tax changes (notably United States v. Carlton, 1994) but only where the change had a legitimate legislative purpose and applied to a short retroactive window.
The second constraint is political. Retroactively invalidating deductions claimed on a prior-year return means asking millions of taxpayers to amend their returns, pay back deducted amounts with interest, and rework their financial planning. This is politically costly under any administration. It has not been done to §168(k) in any of the numerous amendments over the past 25 years. Every phasedown, restoration, and rate change has been prospective — applied to property placed in service after the amendment's effective date.
The clean way to think about it: a 2026 STR placement at 100% bonus is protected by both the statutory placed-in-service rule (the rate at time of placement controls the deduction) and by decades of legislative practice that has treated §168(k) as a prospective-only lever. Neither is a formal guarantee. Both are stronger than the informal risk assessment most investors carry when they worry about retroactive change.
Where retroactive change has happened. Retroactive tax law changes do exist — most commonly for provisions that were unintentionally over-generous (e.g., certain 2020 Employee Retention Credit clawbacks), or for enforcement-focused amendments (e.g., §280E clarifications). §168(k) has never been in either category. It is a deliberately-designed accelerated depreciation provision that Congress uses intentionally. Retroactively repealing a deduction Congress intended to grant is a different animal from clawing back an unintended windfall.
What is the prospective repeal risk, and what does history tell us?
The prospective repeal question is the real one. Prospective change means Congress passes legislation that says "§168(k) drops to X% for property placed in service after Y date." This is common. It has happened multiple times in the timeline above. It does not affect 2026 placements — but it would affect an investor who is planning a 2028 or 2029 acquisition and modeling the tax profile.
Two realistic scenarios are worth thinking through.
Scenario 1: Fiscal pressure phasedown. If Congress needs revenue for other priorities and looks at §168(k) as an offset, a new phasedown could be written into a future bill. Historical precedent: the TCJA phasedown itself was structured as a revenue-timing device — deferring depreciation to later years to make TCJA's overall cost projection score better under budget rules. A similar structure could be used in a future bill. Timing: earliest realistic effective date would be a year or two after any such bill passes, given the political cost of surprise phasedowns.
Scenario 2: Full repeal in a broader tax overhaul. Historically, major overhauls (1986 Tax Reform Act, 2017 TCJA) restructure or eliminate accelerated depreciation provisions. A future overhaul could reduce or repeal §168(k) as part of a broader shift toward slower cost recovery in exchange for lower headline rates. This is a longer-horizon risk — major overhauls happen roughly every 15–30 years and require significant political capital.
Neither scenario is imminent. Neither is impossible. What both share is a prospective effective date: any change applies to property placed in service after the amendment date. A 2026 placement is not exposed to either scenario.
How does OBBBA compare to the TCJA rules — a side-by-side?
The single clearest way to see what OBBBA changed is to compare the two regimes directly. Here is the bonus depreciation rate schedule under TCJA versus what applies now under OBBBA:
| Placed-in-service year | Rate under TCJA (2017 law) | Rate under OBBBA (current law) | Delta |
|---|---|---|---|
| 2022 | 100% | 100% (unchanged) | — |
| 2023 | 80% | 80% (unchanged) | — |
| 2024 | 60% | 60% (unchanged) | — |
| 2025 (before Jan 19) | 40% | 40% (unchanged) | — |
| 2025 (after Jan 19) | 40% | 100% | +60 pts |
| 2026 | 20% | 100% | +80 pts |
| 2027 | 0% | 100% | +100 pts |
| 2028+ | 0% (fully sunset) | 100% (no sunset) | +100 pts |
The delta is largest in 2027 and beyond, where TCJA had scheduled the rate at zero. Under OBBBA there is simply no scheduled reduction — the rate stays at 100% unless a future Congress passes an amendment. A 2028 or 2029 placement, absent new legislation, is still a 100% placement.
What is the acceleration math for STR buyers in 2026?
Here is where the analysis lands for a specific reader: someone evaluating whether to accelerate a 2026 STR purchase to lock in 100% before any hypothetical future change. The right way to model this is to compare the deduction outcomes across three plausible rate scenarios on a real property.
Two observations on the numbers.
First, the acceleration benefit exists but is bounded. On a typical STR, the difference between acting at 100% and acting at a hypothetical 80% rate is around $12,000–$15,000 in Year-1 federal tax savings. That is real money, but it is not the primary driver of the return. What actually drives return on an STR is the property's underlying tax profile — a Diamond-tier property at 24%+ bonus-eligible outperforms a Bronze-tier property at 18% by a much larger margin than the current rate outperforms a hypothetical 80% rate.
Second, the deferred deductions do not disappear at lower rates. If §168(k) drops to 80% in some future year, the missing 20% is not lost — it is depreciated over the normal MACRS life (5 years or 15 years) on a straight-line basis. The economic difference between 100% bonus and 80% bonus is a timing difference, not a permanent loss. For long-hold investors, the time-value cost of the deferral matters, but it is nowhere near the "$170,000 deduction versus $0" framing that some hedged commentary implies.
The decision framework that follows from this: run the property first. If the property's tax profile is strong enough to matter, the current 100% rate is a meaningful tailwind. If the property's tax profile is weak, accelerating to beat a hypothetical rate change is buying a bad property for the wrong reason. For the long-hold time-value math specifically, see the 5-year hold bonus depreciation math for STRs.
Run the property before you decide to accelerate
DepreciMax property reports show the Year-1 bonus-eligible deduction for a specific address in about 20 minutes. Upload 7–25 listing photos, get a line-item breakdown by 5-year, 15-year, and 39-year class — closely calibrated to a formal $5,000–$12,000 cost seg study. $99 one-time; unlimited reports at $149/month for active investors evaluating multiple deals.
Run a $99 Property Report →What are CPAs telling their STR clients right now?
The consistent read from CPAs we have spoken with — those who specialize in short-term rental clients rather than general real estate — is that the OBBBA restoration is being treated as durable enough to plan around, but not so certain that clients should overpay on properties simply to lock in the current rate. The framing is usually some version of: "The rate is 100% and it is not scheduled to change. Buy the property for the property. The tax rate is favorable now, and if it stays favorable through your hold, all the better."
A few specific patterns are worth noting. First, CPAs are more focused on state conformity than on federal rate stability. The federal rate is 100%; whether it stays 100% for the next five years is a lower-probability question than whether the buyer's target state conforms. States like California, New York, New Jersey, Pennsylvania, Illinois, and Massachusetts do not conform to federal §168(k) and require an addback on the state return. This is a known, ongoing, structural gap — and it is more likely to affect a specific investor's total tax outcome than a hypothetical federal phasedown three years out. For the full state-by-state view, see the STR loophole state conformity map and the deeper California bonus depreciation conformity breakdown.
Second, CPAs are updating client models with the OBBBA rates for multi-year plans — treating 2026, 2027, and 2028 placements as 100% by default in projections, with a footnote flagging the legislative risk. This is a change from the mid-2025 practice, which still carried the TCJA phasedown in projections as a hedge.
Third, several CPAs have noted that the client conversation around acceleration has quieted since OBBBA passed. Under TCJA's phasedown, every year of delay meant a real percentage-point drop in the rate — 20 points per year. That created genuine calendar pressure. Under OBBBA, there is no calendar pressure from the federal rate itself; whatever pressure exists comes from market conditions, financing rates, or a specific investor's tax situation.
Why does market selection matter more than legislative timing?
This is the piece that most acceleration discussions skip, and it is the piece that actually determines outcomes. The federal bonus rate is the same 100% for every property in every conforming state — Aspen or Broken Bow, Nantucket or Lake Cumberland. What varies wildly is the bonus-eligible share of purchase price, which is set by two levers: land ratio (the ceiling) and finishes/amenities (where inside the ceiling a specific property lands).
A Diamond-tier property (24%+ bonus-eligible) in a fully-conforming state produces materially more Year-1 deduction than a Bronze-tier property (18%) in a non-conforming state — regardless of whether the federal rate is 100%, 80%, or 60%. The Diamond-Bronze delta on an $850,000 purchase at the same 37% federal bracket is roughly $19,000 in Year-1 federal tax savings. The 100%-versus-80% delta on the same property is roughly $12,500. Market selection has a larger economic footprint than rate stability.
This is the framing worth carrying: a Diamond-tier property in a 100%-conforming state is the hedge. It performs well under 100%, still performs well under 80%, and still generates meaningful acceleration under 60%. A Bronze-tier property in a non-conforming state is exposed on both axes — the deduction is smaller to begin with, and the state gap eats into it further. If the legislative environment tightens in five years, the Diamond-tier property still wins.
The hedge is the property, not the timing. A well-selected STR in a strong market and a conforming state gives the buyer a favorable tax profile under any historically-plausible §168(k) rate. A poorly-selected STR gives a weak profile even at 100%. The DepreciMax Study exists specifically to identify the strong-profile markets before the property search narrows.
Frequently asked questions
Is 100% bonus depreciation permanent under OBBBA?
Yes, in the sense that the One Big Beautiful Bill Act (OBBBA), signed in July 2025, restored IRS §168(k) to 100% for qualifying property placed in service after January 19, 2025 with no scheduled phasedown or sunset date written into the statute. This is a structural difference from the 2017 Tax Cuts and Jobs Act, which explicitly wrote a 100→80→60→40→20 percent phasedown into the law starting in 2023. Under OBBBA, the rate stays at 100% until Congress passes new legislation to change it. Permanent in tax law means indefinite — not immutable — but the absence of a sunset removes the automatic-decay risk that TCJA had built in.
Does OBBBA have a sunset provision for §168(k) like TCJA did?
No. The TCJA of 2017 wrote a statutory phasedown into IRS §168(k) — 100% for property placed in service in 2017–2022, then dropping 20 percentage points per year through 2027. OBBBA replaced that phasedown with a flat 100% rate and did not attach a new expiration date. Any future reduction requires new legislation; it will not happen automatically. This is the single most important legal difference between the two regimes for buyers modeling multi-year acquisition plans.
Could Congress claw back bonus depreciation retroactively?
In theory yes, in practice no modern precedent exists for retroactive statutory changes that eliminate a §168(k) deduction already claimed on a filed return. Under IRC §7805(b), Treasury regulations are generally prospective by default, and Congress historically avoids retroactive statutory changes because of due process considerations and the political cost of disrupting returns already filed. Prospective changes — where a future law says "§168(k) drops to 80% starting January 1 of the following year" — are common. Reaching back to unwind a 100% deduction already claimed on a 2025 or 2026 return would be a break from decades of legislative practice.
If the law changes in 2028, does my 2026 STR purchase still get 100%?
Yes, under any historically plausible legislative approach. Bonus depreciation attaches at the placed-in-service date under IRS §168(k). A property placed in service in 2026 at 100% bonus is generally locked in for that filing year, regardless of what Congress does in 2028. When the TCJA phasedown was in effect, a property placed in service in 2023 got 80% and a property placed in service in 2024 got 60% — the year of placement controlled the rate. The same principle applies now: 2026 placements lock in the 2026 rate on that year's return.
Should I accelerate an STR purchase to lock in 100% bonus depreciation?
The honest answer depends on the specific property, not the legislative timing. If the property has a strong bonus-depreciation profile (high non-land basis, amenity-rich, in a fully-conforming state), acceleration is worth serious consideration because the current 100% rate is the most favorable environment in decades — regardless of whether it lasts one year or ten. If the property has a weak profile (high land ratio, minimal outdoor amenities, non-conforming state), accelerating to beat a hypothetical future phasedown is a bad reason to buy a bad property. The right sequence is: run the property first (a 20-minute, $99 DepreciMax report), then decide whether the tax profile justifies acceleration. Buying at the wrong price to beat a hypothetical 2028 rate change is worse than paying the right price for a property at a lower future rate.
How is OBBBA different from the TCJA bonus depreciation rules?
TCJA (2017) set §168(k) at 100% for property placed in service in 2017–2022 and wrote an explicit five-year phasedown into the statute: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, 0% in 2027. That phasedown was law — it required no further congressional action to take effect. OBBBA (July 2025) restored the rate to 100% for property placed in service after January 19, 2025 and removed the phasedown language entirely. There is no scheduled reduction under OBBBA; the rate remains 100% until new legislation changes it. TCJA had automatic decay built in; OBBBA does not.
What is the current federal bonus depreciation percentage for 2026?
100% for qualifying 5-year personal property and 15-year land improvements placed in service in 2026, under IRS §168(k) as restored by OBBBA. For short-term rental investors, this means finish flooring, cabinetry, appliances, FF&E, pools, hot tubs, fire pits, outdoor kitchens, and similar bonus-eligible components can be fully deducted in the year the property is placed in service. State conformity varies — California, New York, New Jersey, Pennsylvania, Illinois, and Massachusetts do not conform, so state returns require an addback and standard 27.5-year MACRS treatment. The federal 100% rate applies in all 50 states regardless of state conformity.
Skip the policy speculation — run the property
The federal rate is 100%. The state conformity map is documented. The one thing you cannot look up on a policy blog is what a specific property's Year-1 deduction actually is. A $99 DepreciMax report answers that question in about 20 minutes: line-item 5-year, 15-year, and 39-year classification from listing photos, closely calibrated to a formal cost seg study. If you are on the fence about accelerating a 2026 purchase, the report is a $99 decision — not 20 hours of policy speculation.
Run a $99 Property Report →This article is for educational purposes only and does not constitute tax or legal advice. IRS §168(k), IRC §7805(b), and the OBBBA statutory language are complex; individual circumstances vary significantly. Federal legislation is subject to change; the analysis in this article reflects the law as of the publication date. Consult a qualified CPA or tax attorney familiar with short-term rental taxation before acting on this material.