100% Bonus Depreciation Is Back

OBBBA reversed the phase-down that started after 2022 under the Tax Cuts and Jobs Act. Instead of 40% in 2025 and 20% in 2026, the law retroactively restored 100% first-year bonus depreciation for qualified property placed in service after December 31, 2022. That covers new and used equipment, machinery, vehicles (subject to luxury auto limits under IRS Publication 946), and qualified improvement property.

For a Miami restaurant owner buying a $150,000 kitchen buildout, or a construction company adding a $280,000 piece of equipment, the entire cost comes off your federal taxable income in the year you start using it. No spreading it over five or seven years. All of it, year one.

Florida’s Tax Advantage

Florida has no personal income tax. That single fact changes the entire depreciation calculation compared to states like New York and California, where businesses have to add back bonus depreciation on their state returns and pay state tax on the difference.

If you’re structured as a sole proprietorship, partnership, LLC, or S-corp, your business income passes through to your personal return. In New York, that means a state add-back and an extra tax bill. In California, same thing at even higher rates. In Florida, there’s no personal income tax return to file, so the federal deduction is the only one that matters.

Florida does have a corporate income tax at 5.5% for C-corporations, and the state generally conforms to federal depreciation rules including bonus depreciation per the Florida Department of Revenue. So even C-corps in Miami get the full benefit at both the federal and state level — no add-back, no adjustment.

Why This Matters for Miami Specifically

Miami’s economy has been pulling in businesses from higher-tax states at a pace that’s hard to overstate. Hedge funds from Connecticut, tech companies from California, real estate developers from New York — many of them relocated specifically because of Florida’s tax structure. Bonus depreciation at 100% with no state offset makes capital-intensive moves to Miami even more attractive.

Real estate is the obvious one. Miami’s construction and renovation pipeline is enormous, and qualified improvement property (QIP) qualifies for bonus depreciation at the federal level under IRC Section 168(e)(6). A developer renovating a Brickell office building or converting a Wynwood warehouse into creative office space can write off the interior improvement costs immediately. In New York, the same developer would owe state tax on the portion they couldn’t deduct at the state level.

For the boating and marine industry — a big part of Miami’s commercial base — vessels used in a trade or business can qualify for bonus depreciation. A charter company adding a $500,000 boat to its fleet gets the full write-off federally, and Florida doesn’t take any of it back.

The C-Corp Angle

Florida’s corporate income tax rate is 5.5%, applied to federal taxable income with some adjustments. Because Florida conforms to federal bonus depreciation, a C-corp operating in Miami claims the same depreciation on both its federal and Florida returns. There’s no separate depreciation schedule to maintain, no add-back to calculate, and no timing difference between the two returns.

Compare that to a C-corp in New York, which files three returns (federal, state, city) with three different depreciation schedules. Or one in California, which has to track regular MACRS separately from the federal bonus amount. The compliance burden alone is a reason some businesses choose Florida.

Watch Out for the Details

Even without state complications, federal bonus depreciation has rules that trip people up. Luxury automobile limits still cap the first-year deduction for passenger vehicles at around $20,200 (or $28,900 with bonus depreciation for vehicles over 6,000 lbs GVWR) per IRS Publication 463. Listed property — assets that could be used personally — must be used more than 50% for business to qualify.

And if you sell the asset later, you’ll recapture the depreciation as ordinary income under IRC Section 1245. Taking $300,000 of bonus depreciation on a piece of equipment and then selling it two years later for $200,000 doesn’t mean you pocket the depreciation benefit free and clear. The recapture rules bring some of that tax savings back.

One more thing: bonus depreciation can create or increase a net operating loss (NOL). Under current law, NOLs can offset up to 80% of taxable income in future years and carry forward indefinitely per IRC Section 172. For a Miami business that’s in a growth phase with heavy capital spending, stacking bonus depreciation with NOL carryforwards can defer federal tax for several years.

Sources & References

• 26 U.S.C. § 168 — Accelerated Cost Recovery System (MACRS & Bonus Depreciation)
• 26 U.S.C. § 1245 — Gain from Dispositions of Certain Depreciable Property
• 26 U.S.C. § 172 — Net Operating Loss Deduction
• IRS Publication 946 — How to Depreciate Property
• IRS Publication 463 — Travel, Gift, and Car Expenses
• Florida Department of Revenue — Corporate Income Tax
• Tax Cuts and Jobs Act of 2017 (Public Law 115-97)