Impact of OBBBA: Permanent 100% Bonus Depreciation

A recent tax update is making waves in the business community. With the signing of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, a key provision of this legislation is the establishment of permanent 100% bonus depreciation. This can be a game-changer for businesses planning to purchase new equipment, vehicles, or make improvements. In this blog, we'll walk you through what's changed and how you can benefit.

What is Bonus Depreciation?

Bonus depreciation allows businesses to deduct the full cost of eligible assets, such as computers, furniture, or building improvements, in the year they’re placed in service. This means that businesses can now deduct 100% of the cost of qualifying assets placed in service starting January 20, 2025.

Key Benefits of 100% Bonus Depreciation

• Immediate Tax Relief: By taking full depreciation upfront, businesses can significantly reduce their taxes in the year of purchase, thereby increasing available working capital.
• Improved Cash Flow: Accelerated deductions can improve cash flow and free up funds for reinvestment in areas like staffing, system upgrades, or expansions.
• Investment Flexibility: With the permanent nature of this rule, businesses have more flexibility to time purchases based on operational needs and tax strategy.

What Assets Qualify?

Qualifying assets include equipment, machinery with a useful life of 20 years or less, qualified improvement property, computer software, and certain business vehicles. However, it's important to note weight and use caveats for vehicles.

Permanence Reverses Previous Downgrade Schedule

This bonus depreciation rule is now permanent, reversing the prior phase-down schedule which previously set the deduction at 40% for 2025.

Things to Consider

While the federal provision is a significant opportunity, not all states may conform to this rule. It's crucial to check local tax rules before making purchase decisions. Additionally, consulting a tax professional can provide personalized strategies that align with your business goals.

Illustrating the Impact

Consider a business planning to buy a fleet of vehicles or upgrade software systems. With 100% bonus depreciation, upfront costs can be deducted right away, which could alleviate financial burdens and facilitate smoother expansions or technological upgrades.

This new law offers a rare opportunity for upfront tax savings and strategic financial planning. Whether you've been contemplating investments or not, this might be the perfect time to assess your needs, evaluate purchases, and discuss options with a tax advisor. By aligning investments with bonus depreciation benefits, you could indeed lay the groundwork for future growth.