Bonus Depreciation and the “100% Tax Credit” Offer: What It Really Means for High Earners

Inside our advanced planning trainings, this strategy is sometimes called the “100% tax credit offer.” The name is memorable, and also easy to misread. It does not mean the government refunds 100% of what you spend, and it does not mean anyone can promise you will pay zero tax. It describes a goal: size a qualifying purchase so the credits and deductions it generates are large enough to cover all of a given year’s federal liability.

To understand whether that goal is realistic for you, you need two concepts: how depreciation works, and how it interacts with an energy credit. If you are new to the credit side, start with solar tax credits vs. deductions.

What is bonus depreciation?

When a business buys equipment, it normally deducts the cost gradually over the asset’s tax life. That is depreciation. Bonus depreciation lets the business deduct a large share, or all, of the depreciable cost in the first year instead.

Bonus depreciation had been phasing down under prior law. The One Big Beautiful Bill Act, signed in July 2025, restored 100% bonus depreciation for qualifying property acquired after January 19, 2025. Some older training materials still say “through 2025,” which reflects the earlier phase-down and is out of date. Current law; confirm current figures and your eligibility with your CPA.

How do energy credits and depreciation work together?

With qualifying energy property, the owner may claim an investment credit and also depreciate the equipment. The two interact: claiming the credit generally reduces the depreciable basis by half the credit amount. Here is a fully hypothetical walk-through at the top federal bracket.

Every figure above is hypothetical and federal-only, and uses the same 40% credit and 39% down payment as the calculator on this site. Real results move with your bracket, your state, which credit adders a project earns and how much tax you can actually use. The honest takeaway is the mechanism, not the ratio: the credit does most of the work, depreciation adds to it, and the result depends on rates you must confirm.

So what does “100%” mean in practice?

The offer starts from your tax bill and works backward. Our training describes a sizing rule of thumb: take the liability you want to cover and divide by the expected benefit ratio to estimate the cash required.

1. Gather your actual federal liability for the current year, and for prior years your CPA believes may be eligible through amended returns.
2. Estimate the benefit ratio for your bracket and the specific portfolio (for example, a hypothetical $180,000 liability at an assumed 1.8 ratio implies about $100,000 of cash).
3. Your CPA reviews whether you can use the credits and deductions this year, carry them back, or carry them forward.
4. Repeat in later years, sized to that year’s liability, if it still makes sense.

Unused credits can generally be carried to other tax years under current rules, which is why the strategy is often discussed over several years rather than one. Exactly which years, and for how long, is a question for your CPA.

How do people fund it?

Our own guidance is blunt: if you have the cash, paying directly is usually smarter than borrowing. Short-term lending is not cheap, and amended-return refunds can take several months or longer. A plan that only works if the refund arrives on a specific date is a fragile plan.

Is this a way to make money?

No, and it should not be sold that way. The equipment produces some cash flow from its lease, but sponsor materials show it as small relative to the down payment, a few thousand dollars over five years on a six-figure purchase. The strategy is a tax liability reduction strategy. Its value, if any, comes from the credits and deductions your CPA confirms you can use.

That framing matters for what happens next. The real planning question is not “how much can I save?” but “where should the money I would have sent to the IRS go instead?” For many clients, the answer is the unfinished business already on their list: protecting income, funding a buy-sell agreement, building retirement income, or covering an estate liability. A tax strategy without that second step just moves cash from one account to another.

Who does this fit?

• Federal bracket of 22% or higher, with real, recurring tax liability.
• Business owners and high-income W-2 earners whose CPA confirms they can use the credits and losses.
• Anyone with a large capital-gains event, such as a business sale or real estate exit.
• People who can commit the cash for at least five years, the hold period needed to avoid credit recapture.

Questions to ask yourself (and your CPA)

• What did I pay in federal tax this year and in each of the last three years?
• Will the losses and credits from this activity actually offset my income, given my participation?
• If the refund took a year, could I carry any loan comfortably?
• Where would the money I save go next, and is that decision already planned?

The risks, stated plainly

• Law changes. The 2025 legislation that restored 100% bonus depreciation also accelerated the phase-out of solar credits, tying eligibility to when projects begin construction or are placed in service. Confirm current figures with your advisor.
• Recapture. Disposing of the property within five years can claw back credits.
• Usability limits. Passive, at-risk, and excess-loss rules may delay the benefit.
• Borrowing costs and timing. Interest and borrowing costs reduce the net benefit if a refund is slow.
• Audit and substantiation. You need clean documentation of basis, financing, and placed-in-service dates.

Nothing about this is “zero risk” or “backed by the IRS,” whatever you may hear elsewhere. The value of working with a coordinated team is that your CPA and attorney stay in the room, and the tax savings get pointed at the next priority. For many owners, that is the subject of the five planning problems most owners leave open. When you are ready to see your own numbers, start on the solar tax credit page.

Go deeper: how Longtable approaches Solar Tax Credit.