100% bonus depreciation is permanent for property acquired after January 19, 2025: no phase-out is scheduled

As companies commit hundreds of billions of dollars to AI data centers, a tax question follows: what happens when 100% bonus depreciation "phases out"? On the text of the law, nothing is scheduled to phase out. Under the 2025 tax law (Pub. L. 119-21), 100% expensing of qualifying equipment is permanent for property acquired after January 19, 2025.

What the statute says

Section 168(k) of the Internal Revenue Code, in the current U.S. Code text, says the first-year deduction for qualified property "shall include an allowance equal to 100 percent of the adjusted basis." Qualified property includes tangible property with a recovery period of 20 years or less, computer software, and water utility property. The note on the 2025 amendment says it applies "to property acquired after January 19, 2025." We found no step-down schedule or expiry date in the subsection. The old phase-down (80%, 60%, 40%) covered property placed in service in earlier years, and a taxpayer could elect 40% for its first tax year ending after January 19, 2025.

The part that does end

A separate rule, section 168(n), covers "qualified production property": nonresidential real property used in manufacturing and similar production. It also allows 100% expensing, but only if construction begins after January 19, 2025 and before January 1, 2029, and the property is placed in service before January 1, 2031. Buildings generally are not eligible under 168(k) at all.

What it is worth, with arithmetic

Illustration only: a contractor spends $200,000 on a work truck and equipment that qualifies. Without bonus depreciation the cost is deducted over several years; with it, the whole $200,000 comes off this year's taxable income. At an assumed 24% combined tax rate, that is $48,000 less tax this year. Total deductions over time are the same, so the benefit is timing: cash stays in the business sooner. For a hyperscaler spending billions, the same logic applies at scale, which is why the policy matters to the AI spending debate. We have not found company filings that quantify it, and we do not estimate it here.

Smaller buyers should also note section 179, which in the current text caps expensing at $2,500,000 and reduces it dollar for dollar once purchases exceed $4,000,000. Which tool fits depends on the asset and the owner's taxable income, so it is a question for a tax professional. Our small-business desk covers the borrowing side.

Sources: 26 U.S.C. 168 and 179 (Cornell LII). Not tax advice; confirm with a qualified adviser. This is information, not investment advice.