OBBBA: What 100% Bonus Depreciation Means for You

A Major Tax Update: What's Happened?

Big news for business owners—on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, bringing a permanent change that could significantly impact your business finances. The key provision: permanent 100% bonus depreciation. This change can be a game-changer for those planning to make those long-anticipated purchases of new equipment, vehicles, or property improvements. Let's break it down and see how your business can benefit.

What's Changed?

• Businesses can now deduct 100% of the cost of qualifying assets placed in service starting from January 20, 2025. This provides an upfront financial boost by reducing taxes in the year of purchase.
• The bonus depreciation rule is now permanent, reversing the previous phase-down schedule (which was only 40% for 2025).

Eligibility: What's Included?

With this update, qualifying assets now span a broad spectrum, including:

• Equipment and machinery with a useful life of 20 years or less.
• Qualified improvement properties, which can include building renovations.
• Computer software and certain business vehicles, though these may have specific weight and use conditions.

Benefits of Bonus Depreciation

The benefits of taking full depreciation upfront extend well beyond simple tax savings:

• Improved Cash Flow: Accelerating deductions helps enhance cash flow, freeing up funds that can be reinvested into areas like staffing, system upgrades, or business expansions.
• Purchase Timing Flexibility: Businesses now have more freedom to strategically time their purchases based on operational needs and tax strategies.

Strategic Use Cases for Bonus Depreciation

Understanding these benefits allows businesses to plan strategically. For instance:

• If you're considering expanding your fleet of vehicles, this law provides a perfect opportunity to do so with significant tax savings.
• Upgrading outdated software systems not only boosts efficiency but also provides immediate financial relief through this bonus depreciation.

Local Tax Considerations

It's essential to note that not all states may conform to this federal provision, so always check local tax rules. Consulting with a tax professional before making purchasing decisions is highly recommended to ensure that your strategy aligns with both federal and state tax regulations.

A Rare Opportunity for Business Growth

This new law opens up a rare chance for upfront tax savings and strategic financial planning. It's particularly advantageous if you already have investments on your radar. We encourage you to evaluate upcoming purchases and reach out to a tax advisor to see how bonus depreciation could cater to your specific business needs.