IRS Notice 2026-11 guidance on permanent 100 percent bonus depreciation under Section 168k for qualifying business property

100 percent bonus depreciation

Bonus depreciation is back in full, and this time it is here to stay. With the passage of the One Big Beautiful Bill Act, Congress permanently restored 100% bonus depreciation for qualifying property. The IRS issued Notice 2026-11, which provides interim guidance on how tax professionals may apply the updated §168(k) rules until proposed regulations are issued.

If your clients are planning capital purchases or have recently placed assets in service, this guidance is worth a close look. The notice keeps most familiar bonus depreciation concepts intact while updating the timing rules to reflect the new law.

WHAT OBBBA CHANGED AND WHY IT MATTERS

Under the prior law, the bonus depreciation percentage was phased down year by year. The new legislation reversed that scheduled phaseout and made the full 100% additional first-year (bonus) depreciation deduction permanent for qualified property acquired after Jan. 19, 2025.

These guidelines confirm that taxpayers can fully expense eligible §168(k)-qualified property in the year it is placed in service. For tax pros, the big benefit is certainty. Clients can now make long-term investment-purchasing decisions without worrying that the bonus depreciation option will disappear in a few years.

QUALIFIED PROPERTY: SAME RULES, NEW DATES

Taxpayers can continue using the current §168(k) definition of qualified property. In general, this includes property with a recovery period of 20 years or less, certain computer software and other eligible assets, assuming the original use begins with the taxpayer or the property is acquired by purchase from an unrelated party.

The key difference is timing. To qualify for permanent 100% bonus depreciation, the property must be acquired after Jan. 19, 2025, and placed in service after Jan. 19, 2025. That makes documentation more important than ever. Purchase agreements, receipts, delivery dates and placed-in-service records all matter.

ACQUISITION DATES AND BINDING CONTRACTS

The IRS instructs taxpayers to apply the existing written binding contract rules to determine whether property is acquired before or after the Jan. 19, 2025, cutoff.

If a client entered into a binding written contract on or before that date, the property is generally treated as acquired on that contract date, even if it was delivered or placed in service later.

On the other hand, property purchased under contracts entered into after that date may qualify for the permanent 100% deduction.

This is a critical review step for tax pros. A quick contract date check can determine whether a client gets full bonus depreciation or falls under prior rules.

BONUS DEPRECIATION ELECTION EVALUATIONS STILL MATTER

While full expensing sounds appealing, it is not always the best answer. Taxpayers may still make elections under §168(k), including electing out of bonus depreciation for a class of property, and in some cases choosing depreciation methods, such as the alternative depreciation system (ADS), that affect how property is depreciated.

Full bonus depreciation can create or increase losses, limit future deductions through timing differences, or interact poorly with other tax provisions. Reviewing the big picture before defaulting to 100% expensing is still essential.

HOW TAX PROS SHOULD APPLY NEW §168(k) GUIDANCE

This notice clarifies bonus depreciation planning, but it does not eliminate the need for careful review. Here are a few practical steps to build into your workflow:

• Confirm contract and acquisition dates for all major asset purchases.

• Verify placed-in-service dates and supporting documentation.

• Evaluate whether full bonus depreciation aligns with the client’s tax strategy.

• Discuss elections before filing rather than defaulting to full expensing.

Notice 2026-11 is interim guidance, but the IRS allows taxpayers to rely on it for eligible property placed in service before proposed regulations are published, as long as the guidance is applied consistently. While more detailed regulations are expected, the notice provides a solid foundation for applying the law now.

ABOUT THE AUTHOR(S) - NATP team. IRS Notice 2026-11 guidance on permanent 100 percent bonus depreciation under Section 168k for qualifying business property