Details of Public Law 119-21, section 70301 , One Big Beautiful Bill Act

The provision makes several changes to the additional first year (bonus) depreciation for qualified property, previously established under the Tax Cuts and Jobs Act (Public Law 115-97, section 13201), as follows:

Makes permanent the 100 percent additional first year depreciation for qualified property acquired after January 19, 2025.

Adds “qualified sound recording production” as qualified property eligible for bonus depreciation.

Removes self-constructed property from the special rules relating to bonus depreciation.

Modifies the special rule relating to certain plants bearing fruits and nuts which are planted or grafted by removing the operative date of January 1, 2027, and allowing the 100 percent additional bonus depreciation.

Repeals the phase down percentages.

Allows qualified property placed in service and specified plants planted and grafted during the first taxable year ending after January 19, 2025, to transition from specified phase down percentages to 100 percent if elected by the taxpayer.

California conforms, under the PITL, to the federal rules relating to MACRS depreciation, under IRC section 168, as of the specified date of January 1, 2025, with modifications. However, the PITL specifically does not conform to bonus depreciation; thus, the provision that modifies and extends bonus depreciation is not applicable under the PITL.

California does not conform, under the CTL, to IRC section 168, relating to MACRS depreciation. The CTL is in substantial conformity to the pre-1981 Class Life Asset Depreciation Range System (ADR) deductions. The ADR is an accounting method established by the IRS based on the “useful life” of depreciable property.

The CTL allows “additional first-year depreciation” of up to $10,000 per year. However, the CTL allows taxpayers to elect the IRC section 179 expensing deduction in lieu of “additional first-year depreciation.” Property qualifying for “additional first-year depreciation” is similar to property qualifying under IRC section 179. However, a corporation is allowed only one or the other of the expensing deductions, not both.