OBBBA Updates: Key Insights on Bonus Depreciation

A major tax update has been signed into law that has the potential to significantly impact your business finances. The One Big Beautiful Bill Act (OBBBA), passed on July 4, 2025, introduces a transformative change with its key provision: permanent 100% bonus depreciation. For businesses planning to acquire new equipment, vehicles, or make improvements, this could be a game-changer. Let's walk you through the changes and explore the potential benefits for your business.

What’s Changed?

• Businesses can now deduct 100% of the cost of qualifying assets when they are placed in service starting January 20, 2025.
• This rule reverses previous plans to phase down the bonus depreciation, which previously stood at 40% for 2025.
• The bonus depreciation now covers a wide range of assets, including equipment, machinery with a useful life of 20 years or less, qualified improvement property, computer software, and certain business vehicles, with some weight and use limitations.
• By taking full depreciation upfront, businesses can reduce taxes in the year of purchase, thereby increasing available working capital.

Benefits of Full Depreciation

• Improved Cash Flow: Accelerated deductions can enhance cash flow by freeing up funds that can be reinvested into staffing, system upgrades, or business expansions.
• Purchase Timing Flexibility: With bonus depreciation set permanently at 100%, businesses have more flexibility to time purchases according to operational needs and strategic tax planning.

Potential Use Cases

The law opens new possibilities for businesses to strategically reinvest in their operations. For instance, purchasing a fleet of vehicles or upgrading software systems can now be done with substantial tax savings in mind.

Consider State Conformance

It's important to keep in mind that not all states may align with this federal provision. Businesses should check local tax rules to ensure compliance and maximize benefits.

Your Next Steps

This legislative update offers a rare opportunity for upfront tax savings and strategic financial planning. If you have been considering investments, this could be a strong move for your business growth. We encourage you to evaluate upcoming purchases and consult with a tax advisor to see how the bonus depreciation could specifically benefit your business.