Bonus Depreciation and AMT: Understanding the Tax Implications

If you're asking whether AMT qualifies for bonus depreciation in 2026, the short answer is yes, and thanks to the One Big Beautiful Bill Act (OBBBA), that favorable treatment is now permanent.

The question that trips up a lot of taxpayers is whether claiming those deductions will come back to bite them through the Alternative Minimum Tax.

The good news is that property eligible for 100% bonus depreciation receives identical treatment for regular tax and AMT purposes, so there's no depreciation add-back on Form 6251 for those assets.

This article walks through how AMT and bonus depreciation interact today, what OBBBA changed, and the handful of situations where you still need to pay attention.

What OBBBA Changed for Bonus Depreciation & AMT

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. This matters for AMT planning in one big way: the AMT-friendly treatment of bonus depreciation is now permanent, not temporary.

Before OBBBA, bonus depreciation was already phasing down. Every phase-down year meant more of your asset's basis was depreciated under regular MACRS rules, which could create AMT depreciation adjustments on the non-bonus portion. That uncertainty is gone.

Here's what the landscape looks like now:

Placed in Service	Bonus Depreciation Rate	AMT Adjustment Required?
Jan. 1–19, 2025 (transitional)	40%	No on bonus portion; possible on remainder
After Jan. 19, 2025	100%	No
2026 and beyond	100% (permanent)	No

For most real estate investors and business owners buying qualified property today, the practical answer is simple: if you're taking 100% bonus depreciation on an asset acquired after January 19, 2025, there is no AMT depreciation add-back on that asset. The basis is reduced identically for regular tax and AMT purposes.

A few caveats worth knowing:

Legacy assets still matter.

If you took accelerated depreciation on pre-2018 property under rules that weren't fully AMT-aligned, those adjustments can still show up on Form 6251, Line 2l. They shrink as the basis depletes.

State conformity is a different story.

Many states (including California, New York, and New Jersey) decouple from federal bonus depreciation rules, which can create state-level add-backs even when federal AMT is clean.

AMT exemptions are higher for 2025.

Which further reduces the odds of owing AMT at all. The 2025 exemption is $88,100 for single filers and $137,000 for married filing jointly, with phaseouts starting at $626,350 and $1,252,700 respectively.

OBBBA also reset the AMT exemption phaseout rules starting in 2026. The phaseout thresholds drop to $500,000 (single) and $1,000,000 (MFJ), and the phaseout rate doubles from 25% to 50%. So while bonus depreciation stays AMT-neutral, more high-income taxpayers may find themselves in AMT territory from other preference items.

Does AMT Qualify for Bonus Depreciation?

The relationship between bonus depreciation and AMT has been significantly simplified in recent years. Under current tax law, property that qualifies for bonus depreciation receives consistent treatment for both regular tax and AMT calculations. This alignment eliminates what was previously a complex area of tax planning.

One of the most significant advantages is that qualified property is exempt from the unfavorable depreciation adjustments typically required under AMT calculations. This means businesses can claim the same bonus depreciation deduction for both regular tax and AMT purposes, simplifying compliance and potentially reducing tax liability under both systems.

Impact of the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act (TCJA) brought substantial changes to this area of tax law, particularly for corporations. The most notable change was the complete repeal of the corporate AMT. This repeal eliminated the need for the previously available election that allowed corporations to forgo bonus depreciation in exchange for accelerated AMT credit refunds.

For individual taxpayers who remain subject to AMT, the rules continue to be favorable. Bonus depreciation deductions are fully recognized in AMT calculations, helping to minimize the potential for AMT liability. This parallel treatment ensures that taking advantage of bonus depreciation won't trigger unexpected AMT consequences for individual business owners.

AMT Historical Perspective

Understanding the historical context helps appreciate the current simplified treatment:

From 2008 through 2015, corporations faced a more complex landscape. During this period, they had the option to accelerate AMT credits instead of claiming bonus depreciation. This election provided flexibility for corporations with significant AMT credit push forward but added complexity to tax planning decisions.

The PATH Act of 2015 further enhanced these benefits by allowing corporations to monetize up to 50% of their unused AMT credits that were generated before 2016. This provision helped many businesses recover previously paid AMT, though it's now largely historic following the TCJA's corporate AMT repeal.

Tax Planning Considerations

When considering bonus depreciation for your business, keep these key points in mind:

1. The exemption from AMT adjustments makes bonus depreciation particularly attractive for taxpayers who might otherwise be concerned about AMT exposure.

2. While corporate AMT is no longer a concern, individual business owners should still consider their overall tax situation when making bonus depreciation decisions.

3. Documentation requirements remain the same whether the property is being depreciated for regular tax or AMT purposes.

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Frequently Asked Questions

Does bonus depreciation create an AMT adjustment?

No. Not for qualified property. When you take bonus depreciation, the basis reduction is identical for regular tax and AMT purposes, so there's no add-back on Form 6251. This has been the rule since the Tax Cuts and Jobs Act and was made permanent by OBBBA in 2025.

Does Section 179 expensing create an AMT adjustment?

No. Like bonus depreciation, Section 179 expensing is allowed in full for AMT purposes. There is no separate AMT calculation or add-back for assets you elect to expense under Section 179. OBBBA raised the Section 179 cap to $2.5 million with a $4 million phaseout threshold starting in 2025.

What about rental property, does bonus depreciation on a cost segregation study trigger AMT?

No, and this is one of the most common concerns among real estate investors. When a cost segregation study reclassifies components of a rental property, those components become eligible for 100% bonus depreciation. Because bonus depreciation is AMT-neutral, the accelerated deductions don't create AMT add-backs.

The building shell itself is depreciated straight-line for both regular tax and AMT, so it also doesn't create an adjustment.

Can an AMT depreciation adjustment be negative?

Yes, though it's less common. In later years of an asset's life, the AMT depreciation deduction (using longer ADS recovery periods) can exceed the regular MACRS deduction as the accelerated method tapers off. When that happens, the adjustment on Form 6251, Line 2l becomes a subtraction from AMTI instead of an add-back.

Is corporate AMT still a concern?

For most businesses, no. The Tax Cuts and Jobs Act repealed the original corporate AMT starting in 2018. However, the Inflation Reduction Act of 2022 created a new 15% corporate alternative minimum tax (CAMT) on large corporations with average adjusted financial statement income of $1 billion or more. For small and mid-sized businesses, CAMT does not apply.

Why do I still see AMT depreciation adjustments on my return?

A few possible reasons: (1) you have legacy assets from before the current bonus depreciation rules took effect and the basis hasn't fully depleted; (2) you have assets where you elected out of bonus depreciation, so the regular MACRS vs. ADS difference creates an adjustment; (3) you have certain property types that don't qualify for bonus depreciation (like real property not eligible under Section 168(k)); or (4) your state requires an AMT-style adjustment even when federal does not.

Should I elect out of bonus depreciation to manage AMT?

Usually no, bonus depreciation is AMT-neutral, so electing out doesn't protect you from AMT. Taxpayers generally elect out for other reasons: smoothing income across years, preserving deductions for future higher-income years, or avoiding NOL complications. Run projections with your CPA before making the election, since it applies class-by-class and is generally irrevocable without IRS consent.

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Anticipation going into future

As businesses continue to invest in qualified property, the aligned treatment of bonus depreciation for regular tax and AMT purposes provides welcome certainty in tax planning. This consistency helps businesses make investment decisions based on business needs rather than tax complexity.

Remember to consult with a qualified tax professional for specific guidance on how these rules apply to your situation, as tax laws can be complex and individual circumstances vary significantly.

100bonusdepreciation.com offers expert insights and in-depth analysis to help you stay informed on the latest regulations surrounding corporate AMT and bonus depreciation.

What worries you most when using bonus depreciation, despite this favorable AMT treatment?

• Documentation & compliance risk
• Misunderstanding what qualifies
• Audits or IRS pushback
• Nothing, I feel confident about it