Bonus Depreciation Acquisition-Date Rules
Under current law, the bonus depreciation rate depends on when property was acquired. Binding contracts and self-constructed property have specific rules. As of October 16, 2026, 100 percent applies only to qualified property acquired after January 19, 2025. Educational information, not tax advice.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- Property must be acquired after January 19, 2025 for the permanent 100% rate (as of October 16, 2026).
- Property is not treated as acquired after the date a written binding contract for it was entered into.
- Self-constructed property is acquired when physical work of a significant nature begins; a safe harbor uses more than 10% of cost.
- Notice 2026-11 applies Treas. Reg. §1.168(k)-2(b)(5) with the new dates substituted.
- Contract analysis is fact-specific and belongs with the taxpayer’s CPA or attorney.
Section 70301(c) of Public Law 119-21 applies the 100 percent rate to property acquired after January 19, 2025, and states that property is not treated as acquired after the date on which a written binding contract for its acquisition is entered into. IRS Notice 2026-11 applies the existing acquisition-date rules of Treas. Reg. §1.168(k)-2(b)(5) with the new dates: substitute “January 19, 2025” for “September 27, 2017” and “January 20, 2025” for “September 28, 2017.”
A building under a binding contract signed before January 20, 2025 that closes later is therefore treated as acquired on the contract date, and its qualified components follow the prior phase-down rate for the year they are placed in service — 40 percent for 2025 placements and 20 percent for 2026 placements, as of October 16, 2026. The closing date does not move that property into the permanent 100 percent bucket.
Placed-in-service date remains a separate test. Property must still be placed in service to start depreciation. For post-January 19, 2025 acquisitions, the pre-2027 placed-in-service deadline that applied under the prior phase-down was removed. Acquisition date and placed-in-service date can fall in different years.
Self-constructed property and property acquired under a contract that is not binding have their own tests, summarized below from Notice 2026-11’s restatement of the regulation. Those tests are easy to misapply to a construction loan, a letter of intent, or a term sheet.
This page is educational information, not tax advice. Before relying on a 100 percent rate for a 2025 or later closing, have the taxpayer’s CPA or attorney review the contract dates and terms.
Binding contracts
As summarized in Notice 2026-11, the acquisition date under a written binding contract is the latest of the date the contract is entered into, the date it becomes enforceable under state law, the end of any cancellation period, and the date all contingencies are satisfied.
A contract that limits damages to a specified amount, such as liquidated damages, is generally not binding for this purpose. A contract that looks “signed” can still fail the regulation’s binding test. That is why a purchase-and-sale agreement needs a legal reading, not a calendar glance.
The same binding-contract rule is why a 2024 contract for a 2026 delivery stays on the phase-down even though the property is placed in service after the 2025 law. The statute’s “not treated as acquired after” sentence is doing that work.
Self-constructed property
Self-constructed property is acquired when physical work of a significant nature begins. Preliminary activities — planning, design, securing financing, and similar steps — do not start the clock. A safe harbor treats the beginning date as the date more than 10 percent of total cost, excluding land and preliminary activities, has been paid or incurred.
Notice 2026-11 also allows a component election for some components of larger self-constructed property begun before January 20, 2025. A component acquired or begun after January 19, 2025 may be tested separately. The election is optional and fact-specific.
The prior acquisition and placed-in-service deadlines that applied to long-production-period property and certain aircraft no longer apply to property acquired after January 19, 2025, per Notice 2026-11 §§3.04 and 3.06.
Non-binding contracts
If there is no written binding contract, the regulation’s acquisition date is when more than 10 percent of the total cost of the property is paid or incurred. That test is not the same as closing, and it is not the same as a letter of intent.
Progress payments on a construction contract that is binding are analyzed under the binding-contract rule, not under this 10 percent rule. Mixing the two tests is a common error.
Cost records that a study uses to allocate basis — pay applications, invoices, change orders — are also the records a CPA uses to apply these percentage tests. Super Intelligence, as proposed, would organize those records. It does not decide whether a contract is binding.
Professional judgment
Contract analysis is fact-specific. State-law enforceability, cancellation windows, and contingencies are legal questions. This page restates the federal tax tests; it does not interpret a particular purchase agreement.
Taxpayers relying on Notice 2026-11 must follow sections 3 through 5 in their entirety for all eligible property. Cherry-picking one safe harbor and ignoring another is not the reliance standard the notice states.
Look-back studies use the original acquisition date. Completing a study in 2026 does not move a 2019 acquisition into the 100 percent rate.
Sources
- 1Public Law 119-21 (July 4, 2025), §§70301, 70306, 70307(opens in a new tab)
The 2025 reconciliation law, which the IRS describes as commonly known as the One, Big, Beautiful Bill Act.
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