Abraham Ziadeh
OBBBA's Permanent Bonus Depreciation: A Game Changer for Businesses

Understanding the OBBBA and Its Impact

Recent tax updates have ushered in significant changes that could profoundly affect how businesses approach their finances. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing a pivotal shift in bonus depreciation. This act's hallmark provision, a permanent 100% bonus depreciation, is poised to revolutionize how businesses plan large purchases.

What Has Changed?

  • Businesses can now deduct 100% of the cost of qualifying assets placed in service starting January 20, 2025. This means when you buy new equipment, machinery, or vehicles, you have the opportunity to deduct the full purchase amount in the year they are placed in service.
  • This update also reverses the prior phase-down schedule, where bonus depreciation was set to decrease to 40% in 2025. Now, businesses can consistently leverage the full deduction, enhancing planning certainty.
  • Qualifying assets for this depreciation include equipment, machinery with a useful life of 20 years or less, computer software, qualified improvement property, and certain business vehicles, subject to specific weight and use criteria.

Why Is This Important for Your Business?

  • Taking full depreciation upfront reduces taxes in the year of purchase, boosting available working capital that can be reinvested into other business areas.
  • With accelerated deductions, cash flow improves, providing funds for potential expansions, system upgrades, or increasing workforce capacity.
  • This flexibility allows you to strategically time purchases according to operational needs and tax strategies.

State Variability and Strategic Considerations

While the federal provision is now standard, not all states may conform to these changes. Thus, it's crucial to check local tax rules to ensure compliance and optimize your business strategy. Consider potential scenarios like purchasing a fleet of vehicles or upgrading software systems to understand the law's benefits fully.

Take Action Now

This legislative change presents a rare opportunity for excellent upfront tax savings and strategic financial planning. It's a potent move for businesses eyeing growth or those with planned investments. Take time to evaluate your upcoming purchases and consult a tax professional to maximize the benefits of bonus depreciation specific to your situation. This new law is not just a modification; it's a strategic advantage that can significantly accelerate your business's growth trajectory. Reach out to a tax advisor to see how you can leverage this opportunity for your greatest benefit.