Two IRS dates, January 19 and January 20, 2025, decide which bonus depreciation rule applies to each owned machine. If you carry owned equipment in an hourly rate, depreciation is one of the inputs you can least afford to guess. It changes how fast the cost of a machine comes back to the company, and that speed feeds straight into the number you quote. Many rate sheets carry a depreciation figure that was typed in once and never revisited. When the rules for special depreciation change, that figure can be wrong for a whole fleet without anyone noticing.
This post is about two calendar dates in the IRS guidance: January 19, 2025 and January 20, 2025. Those two dates are the lines that sort owned machines into different treatment under the special depreciation allowance, which is the part of the tax rules most people call bonus depreciation. Once each machine is on the right side of each line, the rest is arithmetic and a clear record.
Key takeaways
- Sort each machine by its acquisition and placed-in-service dates against January 19, 2025 and January 20, 2025.
- Record the paragraph and the dates behind each group, so the owner can check the call later.
- Use the 100%, 40% and 60% figures only where the rule for that machine applies.
- Turn the chosen percentage into a cost per hour with one depreciation basis for the whole book.
- Recheck the rate at least once a year and whenever the publication or the cited law changes.
Two groups of people read this sheet for different reasons. The estimator needs a rate that is correct on the day a bid goes out. The owner needs a rate that can be explained after the fact, to a customer, a lender, or the company's own accountant. One worksheet can serve both if every number on it traces back to a dated record.
The steps run in the order you would work them. First, collect the dates for each machine. Second, check the reinstatement group against January 19, 2025. Third, check the earlier group against January 20, 2025. Fourth, decide the election. Fifth, turn the result into a cost per hour. Sixth, set a schedule for rechecking the rate. Every specific tax rule, percentage and date below comes from IRS Publication 946, How To Depreciate Property. Where this post describes method rather than tax rules, it says so.
1. Pull the acquisition and placed-in-service dates for each machine
Start with the paperwork, not the rate sheet. For every owned machine you need two dates: the date the company acquired it and the date it was placed in service. The publication's wording uses both together. A machine bought in one month and first put to work on a job weeks later can fall on a different side of a line than the purchase invoice alone suggests, so do not pick one date and assume the other.
Gather three records for each machine: the purchase invoice, the delivery or commissioning record, and the first date the machine ran billable work. Confirm with your tax preparer what placed in service means for your company. If a seller built the machine years before your company bought it, the build date is not one of the two dates this method uses.
Set up a row for each machine in a worksheet with these columns: machine number, description, serial number, cost, acquired date, placed-in-service date, qualified property (yes or no), group, election chosen, depreciation basis, resulting rate, and notes. Keep cost in the same units as the rest of the rate file so nobody has to convert it later. Fill in the group and election columns as steps 2 through 4 classify each machine.
Where a record is missing, mark the date as unknown and resolve it before you run any rate calculation for that machine. A rate built on an unknown date is a guess dressed up as a number, and the owner reviewing the rate will reasonably ask where the figure came from.
When two records disagree, for example an invoice dated one month and a commissioning sign-off dated later, do not average them or pick the more convenient one. Choose the record that shows the event the method asks for, note the other date beside it, and tell the owner which one you used. The disagreement is worth a sentence in the notes because it is the detail a reviewer asks about first.
Pull the register for the whole fleet, not only the machines bought this year. The goal is a correct depreciation input for every hourly rate in the book.
2. Check each machine against January 19, 2025
The first line is January 19, 2025. Publication 946 says the 100% special depreciation allowance was reinstated for certain qualified property acquired and placed in service after January 19, 2025. The same passage says the reinstatement covers long production period property and certain aircraft, and it attributes the change to the law cited in the publication as 119-21, commonly known as the One Big Beautiful Bill Act. Read the wording carefully: both the acquisition date and the placed-in-service date have to fall after the line.
For each machine, answer two yes-or-no questions. Was it both acquired and placed in service after January 19, 2025? Is it qualified property under the definition the publication gives? For the second question, the publication points the reader to the section titled "What Is Qualified Property?" in chapter 3, specifically the part on property acquired after January 19, 2025. Read that section, and write down which paragraph you relied on in the notes column.
A machine that passes both questions goes into the reinstatement group, and the 100% figure is the starting point for its first-year allowance. The 100% figure is the wrong place to stop, though. A machine that looks new, was bought after the date, and still does not meet the definition of qualified property should not inherit the 100% figure simply because it is recent. Mark it as failing the qualification test and keep the note with the worksheet row.
For every machine that passes the test, the notes column should record four things: the paragraph of chapter 3 you relied on, the two dates as they appear on the source record, who made the call, and the date the call was made. Those four entries make the classification reviewable a year later, when the rules may have been updated and someone has to check the earlier answer.
A machine that fails either question is not finished. Move it to step 3 and check the earlier window before deciding how it is treated. A machine acquired before the line is a likely case for that check, even if it was placed in service after the line. A fleet with machines on both sides of the line is normal, so do not force a single treatment across the whole sheet.
3. Check each machine against January 20, 2025
The second line is January 20, 2025, and the publication uses it for the earlier group. It describes a phase down of the special depreciation allowance for qualified property acquired before January 20, 2025. It also points to a separate section, "Certain Qualified Property Acquired after September 27, 2017, and Before January 20, 2025," which covers the window that opens on September 27, 2017 and runs up to the January 20 line. Publication 946 gives the cross-reference for that section under "What Is Qualified Property?" in chapter 3.
The publication uses two phrasings for the lines: "before January 20, 2025" in one place and "after January 19, 2025" in another. Read the exact section for each group whenever a machine's dates sit near the boundary, rather than relying on either phrase alone. The earlier group is the one a fleet-wide 100% assumption would get wrong. A sheet that treats every machine the same way skips this group entirely.
When a machine's acquisition date sits close to January 19 or January 20, 2025, pull the purchase record again and confirm the date to the day. Near the line, a one-day error in the worksheet can move a machine from one group to the other, and that changes the rate. Confirm the date against the document, not against the memory of whoever entered it.
Here are the three rules side by side, as the publication states them:
For the phase-down group, take the percentage from the chapter 3 section the publication points to. Do not fill in a figure from memory, from an older rate sheet, or from a colleague's sheet. Write the section name next to the machine so the owner can check it.
After steps 2 and 3, every machine should carry one of three labels: reinstatement group, earlier group, or neither. A machine labeled neither is a case for a separate review with your tax preparer, not a decision the estimator makes alone.
4. Decide the election for each reinstatement machine
The third rule is an election. The publication says that, instead of taking the 100% special depreciation allowance for property in the reinstatement group, you can elect to take a 40% special depreciation allowance, or a 60% allowance for long production period property and certain aircraft. The election relates to the first tax year ending after January 19, 2025. Publication 946 states it that way, and the election wording there is the text to read before you choose.
Only machines in the reinstatement group carry an election, because the election is framed as an alternative to the 100% allowance. Earlier-group machines do not need an entry in the election column. Leave the cell marked not applicable so the owner can see the machine was considered and not missed.
The election is the owner's decision, not the estimator's. The estimator's job is to make the rate show whichever percentage the owner chooses, and to show the difference clearly. Write the 100% result and the elected result in separate columns beside the machine, so the owner can see both figures before deciding. Record the tax year the election is tied to in the notes.
The election wording says the election applies "for this property." That suggests the choice is worked property by property, not as one switch for the whole fleet. A company may have a reason to elect for one machine and not another, and the worksheet should be able to show that split without any extra explaining.
Keep the percentages exactly as the publication states them: 40% in the general case and 60% for long production period property and certain aircraft. The effect on a rate depends on the machine's cost, the other property on the books, and how the company's tax year is set up. Ask the tax preparer to confirm which option fits the company before any rate is changed on the strength of it.
A short note in the rate file is enough to carry the decision forward. Record the machine's group, the election chosen, the tax year it applies to, who approved it, and the date of approval. Keep that note on the machine's row so a later reviewer finds the decision in the same place as the number it produced.
5. Turn the chosen percentage into a cost per hour
Once a machine has a percentage, the rate needs a bridge from tax depreciation to cost per hour. The bridge is simple to describe and easy to get wrong, so settle its rules before any arithmetic. For the method behind the hourly figure, see Press yearly depreciation: 3 steps for bid rates.
First, decide with the owner whether the rate carries tax depreciation at all. Some companies build machine rates from an internal cost basis and use the tax schedule only for their books. Others want the rate to follow the tax treatment. The publication explains how depreciation works for tax purposes. The choice of basis is a decision for you and the owner, and it should be written at the top of the rate file.
Second, once the basis is fixed, apply it the same way to every machine. For the year the basis covers, take the depreciation amount the basis produces for each machine. Add those amounts up for the machines that share a rate, then divide by the hours that group is expected to bill in that year. The result is the depreciation portion of the hourly rate. Keep it on its own line so it can be seen and changed without disturbing the other costs.
Third, check the logic with letters before you use real numbers. Suppose a machine has cost C and sits in the reinstatement group. These are the publication's percentages applied to your cost, and nothing more.
Illustrative example: one general machine at 40%
Assume a general machine has a cost of 100 units and 20 billed hours in the year, and that it sits in the reinstatement group. The 100% allowance gives a first-year allowance of 100 units, which is 5 units per hour. The 40% election gives 40 units, which is 2 units per hour. The difference is 3 units per hour. This example shows only the first-year allowance, and the numbers are invented to make the arithmetic easy to follow.
Fourth, compare the results before and after. Calculate the rate once under each option and keep both results in the file. If a rate moves sharply when the election changes, the owner should be able to see which line moved and why. A rate that changes without an explanation is a rate nobody can defend when a bid is questioned.
Fifth, check the result against the machines you already know. Pick two or three machines whose rates the owner trusts, rerun them through the same steps, and confirm the new figures land where expected. If they do not, find the line that caused the gap before you change anything else in the book. For the other costs in a bid, see Job cost breakdown: 3 parts to check before you bid.
Watch the hours as well. The depreciation portion of the rate is spread over billed hours, so an hours estimate that is too high pushes the rate too low, and one that is too low pushes it too high. The same machine can show two different rates for reasons unrelated to tax, which is why the owner should see the hours assumption next to the depreciation line rather than buried inside the total.
6. Set a schedule for rechecking the rate
Rules in this area change, and the publication says so. It states that for legislation enacted after it was published, readers should go to IRS.gov/Pub946. Put that address in the rate file, next to the machine list, so the check happens on a schedule and does not depend on someone remembering.
Set a review at least once a year, and again whenever the publication or the cited law is updated. At each review, rerun the four checks: the dates from step 1, the reinstatement test from step 2, the earlier-group test from step 3, and the election from step 4. Record the date of each review beside the rate, so the owner can see when the depreciation input last changed.
When a new machine joins the fleet, run it through steps 1 through 4 before it goes into any rate. No machine should enter the book with an empty depreciation input, and no machine should borrow the input of a similar machine just because the two look alike on the shop floor. The second machine has its own dates, its own qualification answer, and possibly its own election.
When you hand the sheet to the owner, list three things: which machines sit in which group, which election was chosen for each reinstatement machine, and which depreciation basis the rate uses. Ask the owner to sign off on each of the three. That review then becomes a check of decisions already recorded, not a search through the spreadsheet for where a number came from. Expect the owner to ask which machines were excluded from the reinstatement group and why. The notes column from step 2 is the answer to that question.
Keep a short change log at the bottom of the rate file. Each entry should state what changed, which machine or rule it affected, and who reviewed it. The log shows the owner at a glance whether the depreciation input was touched this year, and it makes the next review faster, because the reviewer starts from the last change instead of rereading the whole sheet.
Two dates decide which group each machine falls into. Getting those two lines right, keeping a clear record of each machine's dates, and rechecking the rate on a schedule is most of the work. The rest is keeping the sheet clean enough that anyone reviewing the rate can follow it from the machine to the cost per hour.
Your next step today
Pull the purchase invoice and the commissioning record for one machine, enter both dates in the worksheet, and run that machine through steps 2 and 3. One finished row shows you how the rest of the sheet will work.
Frequently asked questions
Which two dates decide the group?
The two lines are January 19, 2025 and January 20, 2025. Each machine's acquisition and placed-in-service dates are checked against them in steps 2 and 3.
Does a recent machine always get the 100% allowance?
No. The machine also has to meet the definition of qualified property, which the publication sends you to read in chapter 3.
Who decides whether to elect the 40% or 60% option?
The owner decides. The estimator's job is to show both results before the owner chooses.
General information, not legal or tax advice.