OBBBA and Bonus Depreciation: A Boon for Your Business
Michel Knott

A significant tax update recently signed into law could drastically impact your business's financial strategies. The One Big Beautiful Bill Act (OBBBA), passed on July 4, 2025, introduces permanent 100% bonus depreciation. This game-changing provision offers businesses a powerful tool for financial planning, particularly if you're considering investments in new equipment, vehicles, or property improvements. This blog post will guide you through what's changed with the OBBBA and how you can leverage this opportunity.

Understanding Bonus Depreciation

Under the new law, businesses can now deduct 100% of the cost of qualifying assets placed in service starting January 20, 2025. This sweeping reform reverses the previous phase-down schedule, which had been set at 40% for 2025, making the full deduction permanent.

Eligible assets include equipment and machinery with a useful life of 20 years or less, qualified improvement property, computer software, and certain business vehicles, taking into account specific weight and use caveats.

The Strategic Advantage of Full Depreciation

  • Immediate Tax Reduction: By allowing full depreciation upfront, businesses can significantly reduce their tax liabilities in the year of purchase. This leads to an increase in available working capital.
  • Cash Flow Enhancement: Accelerated deductions mean improved cash flow, freeing up funds for reinvestment areas like staffing, system upgrades, or expansions.
  • Flexible Purchase Timing: With this law, companies have more flexibility to schedule asset purchases based on operational needs and tax strategies.
  • Compliance Considerations: It's crucial to note that not all states may conform to this federal provision. Checking your local tax rules is advisable.

Potential Use Cases for Bonus Depreciation

Imagine you're considering buying a new fleet of vehicles or upgrading your software systems. With the OBBBA's bonus depreciation, you can fully deduct these purchases in the year they're placed in service, lowering your taxable income for that year substantially.

Before making these decisions, consulting a tax professional is essential to understand the nuances and potential benefits fully, tailored to your business's specific situation.

To conclude, the OBBBA provides an unparalleled opportunity for upfront tax savings, making strategic financial planning more accessible for businesses poised for growth. If you're planning substantial investments, now is the potential turning point to evaluate your options and consult with a tax advisor to maximize these benefits.