Trump’s 100% Bonus Depreciation Proposal and What It Means for Airbnb and Short-Term Rental Investors

In a bold move that could reshape the financial landscape for short-term rental investors, President Trump has pledged to restore 100% bonus depreciation retroactive to January 20, 2025. This key component of Trump’s 2025 tax policy agenda would reverse the current phase-out schedule established under the original Tax Cuts and Jobs Act (TCJA) of 2017, which reduced the rate to 60% in 2024 and 40% in 2025.

For Airbnb and STR hosts, this proposal represents a potential goldmine of tax savings, allowing immediate write-offs for qualifying property investments rather than depreciating them over years. With the House Ways and Means Committee already approving legislation to extend this benefit through 2029, STR investors may soon regain a powerful tool for offsetting income and maximizing returns. So, join us as we discuss what the potential return of the 100% bonus depreciation means for Airbnb and STR hosts moving forward.

Understanding Bonus Depreciation in 2025

For those who aren’t aware, bonus depreciation is a powerful tax incentive that allows businesses, including short-term rental operators, to immediately deduct a significant portion of qualifying asset costs in the year they’re placed in service, rather than depreciating them over many years. Under the Tax Cuts and Jobs Act (TCJA) of 2017, businesses enjoyed 100% bonus depreciation through 2022, but we’re now in the midst of a scheduled bonus depreciation phase-out that reduces the deduction by 20% annually.

For 2025, the current rate sits at just 40%, down from 60% in 2024, which was down from 100% a couple of years prior. This means STR hosts can only immediately write off 40% of qualifying purchases, with the remaining 60% depreciated over the asset’s useful life.

However, proposed legislation would reinstate 100% bonus depreciation retroactive to January 20, 2025, extending through December 31, 2029. This would allow STR hosts to once again deduct the full cost of eligible assets like furniture, appliances, electronics, and qualified improvement property in the year of purchase. This can potentially help owners save thousands in terms of tax deductions each year.

It’s important to note that bonus depreciation doesn’t apply to real property like buildings or land. Additionally, to qualify, assets must be placed in service (actually used in your business) within the eligible timeframe. With the House Ways and Means Committee already approving legislation to restore 100% bonus depreciation, STR hosts should monitor these developments closely when planning their 2025 tax strategies.

General Impact of The One, Big, Beautiful Bill on Airbnb Hosts and Short-Term Rental Investors

The proposed reinstatement of 100% bonus depreciation has a fundamental impact on the short-term rental industry. This policy provides a new financial incentive for both existing and prospective Airbnb hosts by significantly reducing the effective cost of their property investments.

For new hosts, the tax benefits for Airbnb hosts under this policy could dramatically lower the barrier to entry. Think of a host purchasing a $400,000 property who invests an additional $50,000 in furnishings, appliances, and smart home technology. With 100% bonus depreciation, they could potentially deduct the entire $50,000 in year one, generating substantial tax savings that effectively subsidize their startup costs. This makes previously marginal investments suddenly viable, particularly in competitive markets with high acquisition costs.

Existing hosts would gain renewed incentive to upgrade their properties, enhancing guest experiences while simultaneously creating tax shields. Investments in luxury furnishings, high-end appliances, entertainment systems, and property improvements could all qualify for immediate write-offs, improving property performance while reducing tax liability and making them more worthwhile than they were before.

Going back a bit, the economic impact extends beyond individual hosts and investors. As more capital flows into the short-term rental sector, it’s possible to see an increased demand for:

· Property management services

· Cleaning and maintenance providers

· Designers and stagers specializing in STR properties

· Smart home technology installers

· Photographers and marketing professionals

This ecosystem growth creates jobs and economic activity in tourism-dependent communities. However, the policy also presents challenges. The complexity of implementing an effective short-term rental tax strategy requires sophisticated knowledge of tax law. Hosts must carefully document all purchases, maintain proper business records, and potentially restructure their operations to maximize benefits.

Local regulations may also complicate matters, as some municipalities have implemented restrictions on short-term rentals in response to housing concerns. Hosts must navigate these regulations while implementing their tax strategies.

This is why we always highly recommend talking with local authorities, qualified professionals, and trusted bodies regarding legal or financial matters.

With bonus depreciation scheduled to drop to 40% in 2025 under the current law, the proposed reinstatement to 100% represents a critical opportunity for hosts to help accelerate their investment plans and position their businesses for long-term growth.

Current Status of the Proposed 100% Bonus Depreciation Policy

The bonus depreciation proposal has gained significant momentum as of May 2025. On May 12, the House Ways and Means Committee released and subsequently approved draft legislation that would restore 100% bonus depreciation for qualified assets placed in service after January 19, 2025, through December 31, 2029. This aligns with President Trump’s March 2025 pledge to make the policy retroactive to January 20, 2025.

In recent updates, the proposed 100% bonus depreciation policy passed the House on May 22, 2025, via the “One, Big, Beautiful Bill” by a 215-214 vote. It now awaits Senate approval, where it faces scrutiny over deficit concerns. Senate revisions and negotiations are next, aiming for a July 4 deadline.

The Senate will review and likely amend the House-passed bill over the coming weeks. Senate Majority Leader Thune and Budget Committee Chairman Crapo are leading discussions to finalize the legislation by the end of July to avoid a potential debt default.

Any Senate amendments will require reconciliation between both chambers before the final bill returns to both the House and Senate for approval. Only then can Trump sign the legislation into law. The bill includes restoring 100% bonus depreciation for property placed in service after January 19, 2025, through 2029, along with increasing the Section 179 deduction cap to $2.5 million.

For new and old Airbnb hosts, this creates a planning dilemma. Under current law, bonus depreciation 2025 rates remain at 40%, but the proposed legislation would increase this to 100% retroactively. As the bill progresses, the chances of it getting approved are becoming more and more likely.

So, hosts making significant property investments should document everything meticulously and consult with tax professionals to prepare strategies for both scenarios. As mentioned, the Senate will likely debate and potentially modify the legislation, so hosts should closely monitor developments while preparing for the 2025 tax season.

Wrapping Things Up

The 100% bonus depreciation proposal represents a potential game-changer for Airbnb hosts, offering immediate deductions that can dramatically improve cash flow and accelerate property portfolio growth. While the legislation has cleared important hurdles in the House Ways and Means Committee, final Congressional approval remains pending.

Smart hosts will develop a comprehensive short-term rental tax strategy now, consulting with tax professionals experienced in STR taxation and considering cost segregation studies to maximize potential benefits. With the right preparation, hosts can position themselves to capitalize on these tax advantages immediately when the policy takes effect, potentially creating significant competitive advantages in their markets.

Disclaimer: This article provides general information about the proposed 100% bonus depreciation policy and should not be construed as tax, legal, or financial advice. Tax policies are subject to change, implementation details may vary, and retroactive application is not guaranteed. Consult with a qualified tax professional regarding your specific situation before making any business or investment decisions based on proposed legislation. We assume no liability for actions taken based on this content.