Bonus Depreciation for Freelancers 2026: How 100% §168(k) Write-Offs Work After the One Big Beautiful Bill Act

Published: May 24, 2026 · Reading time: 9 min

TL;DR: 100% bonus depreciation under IRC §168(k) is back — the One Big Beautiful Bill Act (signed July 4, 2025) permanently restored it for qualified property acquired and placed in service after January 19, 2025, reversing the TCJA phase-down. For freelancers, that means you can generally write off 100% of the cost of equipment, computers, furniture, and qualifying vehicles in year one. Bonus differs from §179 in three big ways: no dollar cap, no business-income limit (so it can create a loss), and it applies automatically by asset class unless you elect out. The order is §179 first, then bonus, then MACRS. Watch the listed-property 50%-business-use gate, the §280F luxury-auto cap (raised by $8,000 with bonus), and state non-conformity addbacks. Report it on Form 4562 → Schedule C Line 13.

If you've been told bonus depreciation was "going away," that was true — right up until 2025. The One Big Beautiful Bill Act reversed the phase-down and locked in 100% bonus depreciation permanently. For a freelancer buying gear, a vehicle, or office equipment in 2026, that changes the math on every big purchase. Here's how bonus works, how it differs from Section 179, and when a bonus-driven loss is actually worth taking.

What Bonus Depreciation Is

Depreciation normally spreads the cost of a business asset over its useful life (a laptop over 5 years, furniture over 7). Bonus depreciation under IRC §168(k) lets you deduct a large percentage — now 100% — of that cost in the first year instead.

Qualifying property generally includes:

• Tangible property with a MACRS recovery period of 20 years or less — computers, cameras, furniture, tools, machinery, vehicles
• Off-the-shelf computer software
• Qualified improvement property (interior improvements to nonresidential buildings)
• New and used property, as long as it's your first use of it (not acquired from a related party)

For property placed in service after January 19, 2025, the rate is 100%.

The TCJA Phase-Down — and the OBBBA Reversal

Under the 2017 Tax Cuts and Jobs Act, bonus depreciation was scheduled to ramp down:

The One Big Beautiful Bill Act scrapped that decline. For qualified property acquired and placed in service after January 19, 2025, bonus is permanently 100% again. So a freelancer who buys a $4,000 camera rig in 2026 can deduct the full $4,000 this year — not $800 (the old 20% rate would have given).

Bonus Depreciation vs Section 179

These two tools both front-load deductions, but they're not the same. The differences decide which to use:

The practical rule: apply §179 first when you want surgical control over the deduction amount (it can't create a loss, so it's great for zeroing out income exactly). Then bonus sweeps up the remaining basis. See our Section 179 deduction guide and the broader Schedule C Line 13 depreciation guide.

The Big Advantage: Bonus Can Create a Loss

This is the headline difference. §179 cannot reduce your business income below zero. Bonus depreciation can.

If you have a $30,000 Schedule C profit and buy $50,000 of qualifying equipment, §179 would let you deduct only $30,000 (down to zero income); the rest carries forward. With 100% bonus, you deduct the full $50,000 — creating a $20,000 Schedule C loss that offsets your W-2 wages, your spouse's income, or investment income on your 1040.

If the loss exceeds all your income, it becomes a net operating loss that carries forward under IRC §172 — but watch the §461(l) excess-business-loss limit ($313,000 single / $626,000 joint for 2026, indexed) for high earners. See our net operating loss carryforward guide.

Listed Property and the 50%-Business-Use Gate

Vehicles, cameras, and certain other assets are listed property under §280F. To claim bonus (or §179) on them, business use must exceed 50%. If business use is 50% or less, you lose bonus and §179 entirely and must use straight-line ADS depreciation — and if business use later drops below 50%, you face depreciation recapture. Keep a contemporaneous usage log; our commuting vs business miles guide explains how to substantiate vehicle business use.

The §280F Luxury-Auto Cap

Bonus depreciation does not let you write off the full cost of an expensive car in year one. Passenger autos under 6,000 lbs GVWR are subject to the §280F luxury-auto cap. When bonus applies, the first-year cap is increased by $8,000 under §168(k)(2)(F) — but it's still a ceiling (roughly $20,000+ in the first year, indexed annually).

The workaround many freelancers use: a heavy vehicle over 6,000 lbs GVWR (large SUVs, pickups) is not subject to the passenger-auto cap. With more than 50% business use, a far larger first-year deduction is possible — though §179 on SUVs has its own separate limit (about $31,300 for 2026), and 100% bonus can then apply to the remaining basis. Note: if you use the standard mileage rate ($0.725/mile for 2026) instead of actual expenses, you can't also claim bonus or §179 on that vehicle — the mileage rate already bakes in a depreciation component.

State Non-Conformity: The Hidden Catch

Many states decouple from federal bonus depreciation. California, New York, and others require you to add back the federal bonus on your state return and depreciate the asset over its normal life for state purposes. The result is a federal/state timing difference you'll carry for years. Confirm your state's conformity before assuming a clean 100% write-off everywhere — your tax software or CPA should track the two schedules.

Worked Example: Photographer Buys Gear in 2026

A freelance photographer with $72,000 net Schedule C profit makes 2026 purchases:

Year-one depreciation: ~$35,400 ($15,000 of gear at 100% bonus + the §280F-capped auto amount), reported on Form 4562 → Schedule C Line 13. The gear is fully expensed; only the passenger auto is throttled by the luxury-auto cap.

When a Bonus-Driven Loss Is Worth It

Front-loading 100% isn't always optimal. Take a smaller deduction (elect out of bonus, or use §179 to a target) when:

• You expect to be in a higher bracket in future years — spreading depreciation forward saves more.
• You'd waste the deduction by dropping below the standard deduction or zeroing out income you'd shelter with QBI anyway.
• The §199A QBI interaction matters — a deduction that erases QBI-eligible profit can cost you the 20% QBI benefit on those dollars. See our QBI deduction guide.

Take the full 100% bonus when you have a high-income year to offset, want to create a loss against W-2 or spouse income, or expect flat or lower future rates.

How to Claim It (Quick Steps)

1. Confirm the asset qualifies — 20-year-or-less recovery period, placed in service after January 19, 2025, your first use.
2. Check business use exceeds 50% for listed property (vehicles, cameras).
3. Apply §179 first for control, then let bonus take the rest (or elect out).
4. Apply the §280F cap to passenger autos under 6,000 lbs GVWR.
5. Report on Form 4562 Part II → Schedule C Line 13 and keep the invoice and placed-in-service date.

Authoritative References

• IRC §168(k) — Bonus depreciation
• IRC §179 — Election to expense certain depreciable assets
• IRC §280F — Limitation on depreciation for luxury automobiles and listed property
• IRC §461(l) — Limitation on excess business losses
• About Form 4562 — Depreciation and Amortization
• IRS Publication 946 — How to Depreciate Property

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