Bloomberg, Treasury, IRS Issue Guidance on Bonus Depreciation Tax Break:

The IRS and the Treasury Department issued guidance to implement the “bonus depreciation” tax break on capital spending that was enacted last July as part of the GOP’s big tax-and-spending bill.

A notice (Notice 2026-11) indicating that Treasury and the IRS plan to propose regulations under Section 168(k) was released Wednesday.

The new bonus-depreciation provision allows taxpayers to deduct upfront all of their spending on certain capital assets, instead of having to spread the deductions over the property’s useful life. That’s intended to encourage business investment by allowing companies to speed up the tax benefits they receive from spending on such property.

Companies previously could deduct all of their capital spending immediately under the 2017 tax overhaul, but that was in the process of being phased out and was slated to end entirely by 2027 before the latest law was enacted. The new law restores a 100% immediate deduction permanently.

The notice addresses what property is eligible for immediate 100% expensing and how certain elections related to bonus depreciation will be made. It also addresses the inclusion of qualified sound recording production costs as eligible for bonus depreciation.

Treasury and IRS said they expect their forthcoming proposed regulations to be consistent with the notice.

The notice doesn’t cover the law’s expansion of bonus depreciation under Section 168(n)to cover “qualified production property,” such as property used in manufacturing or refining. That provision of the law likely will be addressed in separate guidance.