Tax insight

Preliminary guidance on bonus depreciation provides familiar rules and favorable elections

Insight
5 minute read
January 21, 2026

What happened?

Treasury and the IRS released Notice 2026-11, providing interim guidance on the additional first-year depreciation deduction under Section 168(k), as amended by the One, Big, Beautiful Bill Act (OBBBA). The notice includes rules on eligibility, elections and reliance for qualified property, and newly-eligible qualified sound recording productions pending forthcoming regulations. The notice largely adopts the previous bonus depreciation regime for OBBBA’s permanent 100% expensing for property acquired after January 19, 2025, and qualified sound recording productions commencing in tax years ending after July 4, 2025.

Why is it relevant?

Notice 2026-11 indicates that Treasury and the IRS intend to issue proposed regulations that largely track Reg. 1.168(k)-2, preserving a familiar framework for eligibility, timing, and elections. The reliance allowed by the notice provides clarity around post-OBBBA acquisition and placed in service concepts, elections, and the treatment of qualified sound recording productions. Taxpayers may rely on the provisions of Notice 2026-11 for qualifying property placed in service in tax years beginning before proposed regulations are published, provided the notice is followed in its entirety beginning with the first relied upon year.

Actions to consider

Larger deductions from bonus depreciation, qualified production property (QPP) under new Section 168(n), domestic research or experimental (R&E) expenditures, and interest expense can diminish the ability to use other deductions, losses, or credits and create unexpected downstream impacts that should be modeled out by taxpayers and that can be addressed with various elections to manage taxable income.

Notice 2026-11 does not address the new deduction for QPP but interim guidance is expected to be issued in the near future. Additionally, taxpayers have an opportunity to influence forthcoming regulations by submitting targeted comments to Treasury and the IRS on issues not addressed by the interim guidance. For a more detailed discussion of the OBBBA’s changes to Sections 168(k) and 168(n), see our Tax Insight, OBBBA permanently extends 100% bonus depreciation, introduces QPP.