IRS Publishes 100% Bonus Depreciation Guidance

The Internal Revenue Service and the Treasury Department have released guidance implementing the expanded “bonus depreciation” provisions enacted last July as part of the GOP’s sweeping tax-and-spending legislation. In Notice 2026-11, issued January 14, 2026, Treasury and the IRS announced their intent to propose regulations under Section 168(k) to carry out the new rules.

The revised bonus depreciation framework permits taxpayers to immediately expense 100% of the cost of certain qualifying capital assets, rather than recovering those costs over the assets’ useful lives. The provision is designed to stimulate business investment by accelerating the tax benefits associated with capital expenditures. Section 168(k) applies to “qualified property,” which generally includes depreciable tangible property with a MACRS recovery period of 20 years or less, such as machinery, equipment, furniture, vehicles, and certain land improvements, as well as qualified improvement property to nonresidential real estate. It also encompasses specified intangible assets, including off-the-shelf computer software and certain film, television, live theatrical, and sound recording production costs, provided the property is properly acquired and placed in service during an eligible tax year. 

Under the Tax Cuts and Jobs Act of 2017, businesses were previously allowed full expensing of capital investments, but that benefit was being gradually phased out and was scheduled to expire entirely by 2027. The newly enacted legislation reverses that trajectory by permanently restoring 100% immediate expensing. Notice 2026-11 provides guidance on the types of property eligible for full expensing and outlines how taxpayers may make certain bonus depreciation elections. It also clarifies that qualified sound recording production costs are treated as eligible property for purposes of bonus depreciation. Treasury and the IRS indicated that forthcoming proposed regulations are expected to align with the positions set forth in the notice.

The notice does not address the law’s expansion of bonus depreciation under Section 168(n) to include “qualified production property,” such as assets used in manufacturing or refining activities. Treasury and the IRS noted that this aspect of the legislation is expected to be the subject of separate guidance. If you have questions about this update, please contact Liskow attorneys Leon Rittenberg III, John Rouchell, Caroline Lafourcade, and Kevin Naccari and visit our Tax practice page.