OBBBA's Bonus Depreciation: A Game-Changer for Businesses

A Major Tax Update for Business Finances

A significant tax update is here, and it could drastically influence your business operations. The One Big Beautiful Bill Act (OBBBA), passed on July 4, 2025, introduced a pivotal change that has the potential to be a game-changer for businesses. At the heart of this new law is the provision for permanent 100% bonus depreciation—a remarkable change that could offer substantial savings to businesses planning on purchasing new equipment, vehicles, or making other improvements. This blog will guide you through the latest changes and how your business could benefit from them.

What Has Changed?

• Permanent 100% Bonus Depreciation: Businesses can permanently deduct 100% of the cost of qualifying assets placed in service starting January 20, 2025. This critical change reverses the previous phase-down schedule, which reduced bonus depreciation to 40% for 2025.
• Qualifying Assets: Eligible assets include equipment, machinery with a useful life of 20 years or less, qualified improvement property, computer software, and specific business vehicles. Bear in mind, there are weight and use caveats for vehicles.
• Benefits of Full Deduction: By opting for bonus depreciation, businesses can deduct the full cost of assets such as computers, furniture, or building improvements in the year they’re placed in service. This approach can significantly boost cash flow and release funds for reinvestment into staffing, system upgrades, or expansion projects.

Key Advantages

• Improved Cash Flow: Taking full depreciation upfront decreases taxes in the purchase year, increasing available working capital.
• Strategic Timing: With newfound flexibility, businesses can time purchases based on operational needs and tax strategy, ensuring they make the most of their investments.
• Check Local Rules: Although this change is at the federal level, not all states may align with this provision. Be sure to verify local tax regulations for compliance.

Use Cases and Planning

Consider the possibilities: a transportation company buying an entire fleet of vehicles or a tech firm upgrading its software systems. The benefits of bonus depreciation allow these businesses to reduce tax liabilities, increasing funds available for business reinvestment. It's crucial to stress that consultation with a tax professional is vital before navigating these changes. They can provide tailored advice to maximize the benefits within your business strategy.

The OBBBA provides a rare chance for upfront tax savings and strategic financial planning. It’s a prime time for businesses to explore how this new law aligns with their growth plans, especially if they already have investments on the horizon. Now is the moment to reassess upcoming purchases and collaborate with a tax advisor. Together, these efforts can illuminate how bonus depreciation could advance your unique business situation.