Permanent 100% Bonus Depreciation

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, makes a significant and permanent change to how businesses can deduct asset purchases. Specifically, it restores and makes permanent the 100% first-year bonus depreciation for qualified property acquired and placed into service after January 19, 2025. This allows businesses to fully expense the cost of machinery, equipment, furniture, off-the-shelf software, and qualified improvement property in the year the asset is placed into service, rather than depreciating it over multiple years. The result is a major improvement in immediate cash flow and return on investment. However, timing is critical—assets acquired under a binding written contract dated before January 20, 2025 are not eligible for the new 100% bonus, even if placed in service later. Those assets will still fall under the old phase-down schedule (e.g., 40% bonus in early 2025), so planning around purchase dates is essential.

Expanded Section 179 Deduction

In addition to bonus depreciation, the OBBBA significantly expands the Section 179 expensing limits. Starting in 2025, businesses can now immediately expense up to $2.5 million of qualified property placed in service during the year—up from the prior $1 million cap. The phase-out threshold, where this benefit begins to reduce dollar-for-dollar, has also been increased to $4 million. Section 179 is particularly useful for small and mid-sized businesses investing in shorter-lived assets, such as HVAC systems, roofing, security systems, interior finishes, and other improvements that may not qualify for bonus depreciation.

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