Form 4562 Explained — The 2025 Guide to Depreciation, Section 179 & Bonus Expensing
If you run a small business or freelance operation, Form 4562 (Depreciation and Amortization) is one of the most powerful tools for reducing your taxable income.
Thanks to the OBBBA Act of 2025, the 100% bonus depreciation has been reinstated — allowing you to write off the full cost of qualifying property in the year it’s placed in service.
This post walks through how Form 4562 works, how to claim Section 179 expensing and bonus depreciation, and what’s new for the 2025 tax year from an EA (Enrolled Agent) perspective.
1️⃣ What is Form 4562?
IRS Form 4562 is used to report depreciation of tangible property and amortization of intangible assets.
It’s attached to Schedule C, E, F, Form 1065, or 1120-S, and must be updated whenever you purchase or dispose of business property.
For 2025, the form consolidates reporting for Section 179 expensing, bonus depreciation, and vehicle limits.
▪ If depreciation is claimed without Form 4562, the IRS may disallow the deduction during audit.
▪ List each asset’s basis, acquisition date, depreciation method (MACRS or SL), and placed-in-service date accurately.
2️⃣ Section 179 Expensing Rules
Section 179 lets you immediately expense the full cost of qualifying property in the year it’s placed in service.
For 2025, the deduction limit is $1,220,000 with a phase-out starting at total asset purchases above $3,050,000.
A graphic designer buys a $4,000 laptop and $2,000 printer for business use.
Because both qualify under Section 179, the entire $6,000 can be deducted in 2025 — as long as the business shows enough net income to absorb the expense.
▪ Business use must be over 50%.
▪ Both purchase and placed-in-service dates must fall within 2025.
▪ Enter the deduction in Part I of Form 4562.
3️⃣ 100% Bonus Depreciation Under OBBBA 2025
The OBBBA Act of 2025 reinstated 100% bonus depreciation for qualified property acquired and placed in service on or after January 20, 2025.
Previously, the rate had been reduced to 60%. Assets purchased or contracted before January 19, 2025 still follow the old phased-down percentages.
- Applies to property with a recovery period of 20 years or less, certain software, water systems, and qualified film/TV productions.
- Used property qualifies if not acquired from a related party and basis is not carried over.
On February 1, 2025, a consultant purchases office equipment for $10,000.
Because it’s placed in service after January 20, the full $10,000 is deductible in 2025.
If the contract had been signed before January 19, only 40% would qualify.
▪ Keep records of acquisition and placed-in-service dates.
▪ Attach supporting asset schedules for Part II of Form 4562.
4️⃣ Vehicle Depreciation & Luxury Auto Limits
Passenger vehicles are subject to “Luxury Auto Limits.” For 2025, the first-year maximum (including bonus depreciation) is $20,400.
However, SUVs weighing over 6,000 pounds qualify for full Section 179 expensing.
- Vehicle details are reported in Part V of Form 4562, including business use percentage and mileage.
- For standard mileage method, the 2025 depreciation component is 33¢ per mile.
5️⃣ EA Case Example — Home Business Assets
Alex, an EA working from home, buys a computer ($2,000) and printer ($500) on February 1, 2025.
Because the home office use is 100%, Alex claims 100% bonus depreciation for a $2,500 total deduction.
The deduction flows to Schedule C (Line 13).
▪ Keep receipts and payment records for at least 3–5 years.
▪ Document each asset’s placed-in-service date and use percentage.
▪ Avoid double-counting when claiming both §179 and bonus depreciation.
6️⃣ FAQ — Common Questions
Q1. Why was 100% bonus depreciation reinstated?
The 2025 OBBBA Act temporarily restored 100% bonus depreciation to stimulate business investment.
It applies only to property acquired and placed in service after January 20, 2025.
Q2. Who must file Form 4562?
Any individual or entity (sole proprietor, partnership, S-Corp, etc.) that purchases depreciable assets during the year must attach Form 4562 to its tax return.
Q3. Can home-office equipment be depreciated?
Yes. Desks, chairs, computers, and similar items used for business can qualify for Section 179 or bonus depreciation if business use exceeds 50%.