The 30-second answer
Cost segregation still works without bonus depreciation. Bonus depreciation accelerates reclassified components into a single Year-1 deduction, but even without it, moving basis from a 27.5- or 39-year schedule into 5-, 7-, and 15-year MACRS dramatically front-loads your deductions. The benefit is smaller and spread over a few years instead of all in Year 1, but a study still pays off, especially via the time value of money and on a Form 3115 lookback. (Note: 100% bonus is currently in effect under §168(k) for property placed in service after January 19, 2025.)
How it works without bonus
Bonus depreciation is the accelerator on top, not the engine. The engine is the reclassification itself:
- Without a study, a component depreciates over 27.5 or 39 years, a few percent a year.
- With a study but no bonus, that same component depreciates over 5, 7, or 15 years under regular MACRS, several times faster.
- With a study and bonus, the component is deducted 100% in Year 1.
So even at 0% bonus, a 5-year component is being written off roughly 5x to 7x faster than if it sat in the building's 39-year class. The deduction is spread over the first several years instead of landing entirely in Year 1, but it is still a large acceleration over doing nothing.
When this matters
- Phase-down years. For property placed in service in 2023 (80% bonus) or 2024 (60% bonus), the non-bonus portion still depreciates on the accelerated MACRS schedule. A study captures both.
- States that decouple from bonus. Many states do not allow §168(k) bonus but do follow regular MACRS, so the study still accelerates your state depreciation even where bonus is added back.
- Future law changes. If federal bonus is ever reduced again, cost segregation keeps working on the MACRS acceleration alone.
Because bonus rates change with the placed-in-service year, your study assigns the correct rate per component. See the bonus depreciation hub for current rules, or estimate your number on the calculator.