100% Bonus Depreciation Is Back Permanently: What IRS Notice 2026-11 Means for Businesses
Overview
IRS Notice 2026-11 provides interim guidance implementing one of the most significant business tax changes enacted under the One Big Beautiful Bill Act. The notice confirms that Congress permanently restored 100% additional first year depreciation under Internal Revenue Code section 168(k) for qualifying property acquired after January 19, 2025.
This guidance is critical for businesses making capital investment decisions in 2025 and beyond. It reverses the scheduled phase down of bonus depreciation that had been in effect since 2023 and provides immediate clarity on acquisition dates, elections, and new categories of eligible property.
What Changed Under OBBBA
Prior law gradually reduced bonus depreciation to 40% for property placed in service during 2025. OBBBA eliminated the phase down entirely and replaced it with a permanent 100% additional first year depreciation deduction for qualifying property acquired and placed in service after January 19, 2025.
IRS Notice 2026-11 confirms that the existing regulatory framework under Treasury Regulation section 1.168(k)-2 generally continues to apply, but with key substitutions and modifications reflecting the new law. A deeper comparison of accelerated expensing methods is discussed in Bonus Depreciation vs Section 179 After OBBBA .
Key Tax Impacts
- Permanent 100% bonus depreciation for qualifying property acquired after January 19, 2025
- Removal of placed in service deadline requirements that previously limited eligibility
- Updated acquisition date rules tied to binding contracts and self constructed property
- Expanded eligibility for certain long production period property and aircraft
- New planning flexibility through revised section 168(k)(10) election allowing 40% or 60% deductions in limited cases
Acquisition Date Rules Matter More Than Ever
The notice emphasizes that property is not treated as acquired after January 19, 2025 if it was subject to a written binding contract entered into on or before that date. For self constructed property, acquisition depends on when physical work of a significant nature begins or when more than 10% of total cost is incurred or paid.
These rules create planning opportunities but also introduce traps for taxpayers who signed contracts in late 2024 or early January 2025. Proper documentation and timing analysis are now essential, particularly for larger facility and production related investments.
New Category: Qualified Sound Recording Productions
Notice 2026-11 confirms that qualified sound recording productions produced and recorded in the United States are now treated as qualified property for bonus depreciation purposes. These productions are considered acquired when principal recording begins and placed in service upon initial release or broadcast.
This expansion aligns with other accelerated cost recovery provisions under OBBBA, including those applicable to manufacturing and production facilities discussed in Qualified Production Property Under OBBBA .
Elections Taxpayers Should Review
Taxpayers may still elect out of bonus depreciation on a class by class basis under section 168(k)(7). In addition, OBBBA revised the section 168(k)(10) election, allowing taxpayers in their first post January 19, 2025 taxable year to claim less than 100% bonus depreciation in limited circumstances.
These elections are made on Form 4562 and must be carefully coordinated with state conformity rules, long term income projections, and basis planning.
Reliance and Effective Dates
Taxpayers may rely on IRS Notice 2026-11 for property placed in service before final regulations are issued, provided the guidance is applied consistently to all eligible property beginning with the first year of reliance.
This reliance provision gives businesses certainty to proceed with acquisitions now rather than waiting for proposed regulations.
See current federal rates on the Economic Dashboard .
Source: IRS Notice 2026-11
