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In one sentence: bonus depreciation is the rule that lets you deduct the full cost of certain building parts in the first year, and a cost segregation study is the document that proves which parts qualify.

Meet Walt. He runs a machine shop and just bought the building he had been renting for $1,100,000. His accountant told him the building would be written off over 39 years, about $28,000 a year. Walt asked why his neighbor, who bought a similar building, had a first-year deduction ten times that size. The answer was bonus depreciation plus an engineered study. Walt's building is not one thing. The parking lot, the fencing, the compressed-air lines, the heavy electrical for his machines, the office flooring: those are short-life parts with five, seven, and fifteen-year lives. Under current law, short-life parts placed in service after January 19, 2025 can be deducted 100% in year one. Walt's study documented about $330,000 of them. His first-year deduction went from $28,000 to roughly $330,000, and that rate is now permanent under current law, so the play does not expire on him.

Below is how the rule works, what qualifies, and why the placed-in-service date decides everything.

Reviewed by the Cost Seg America team. Last reviewed September 2026. Educational content, not tax advice. Numbers are illustrative; your CPA applies the results to your return.