A Groundbreaking Tax Update for Businesses

A major tax update was recently signed into law that could significantly impact business finances. The One Big Beautiful Bill Act (OBBBA), passed on July 4, 2025, introduces a key provision: permanent 100% bonus depreciation. This could be a game-changer for businesses planning to purchase new equipment, vehicles, or make improvements. This blog will walk you through the changes and outline how your business can benefit.

Understanding the New Bonus Depreciation Rule

Starting January 20, 2025, businesses can now deduct 100% of the cost of qualifying assets placed in service. This rule is now permanent, reversing the prior phase-down schedule, which was previously 40% for the year 2025. Qualifying assets include equipment, machinery with a useful life of 20 years or less, computer software, and qualified improvement property. Certain business vehicles, with specific weight and use caveats, also qualify.

Key Benefits of Bonus Depreciation

• Immediate Deduction Benefits: Bonus depreciation allows you to deduct the full cost of eligible assets—like computers, furniture, or building improvements—in the year they are placed in service. This upfront deduction reduces taxes in the purchase year, freeing up working capital.
• Improved Cash Flow: Accelerated deductions can improve cash flow and free funds for reinvestment in areas like staffing, system upgrades, or expansions.
• Purchase Flexibility: Businesses now have more flexibility to time purchases based on their operational needs and tax strategy for optimal financial benefits.

Considerations and Practical Advice

It's important to note that not all states may conform to this federal provision, so check your local tax rules. Consulting a tax professional before making decisions is advisable to tailor this advantage to your specific needs. Potential use cases include buying a fleet of vehicles or upgrading software systems, illustrating the benefits of leveraging this provision. This OBBBA update provides a rare opportunity for tax savings and strategic financial planning. It could potentially strengthen your business growth, especially if investments are already on the horizon.

Next Steps

Consider evaluating your upcoming purchases and reach out to a tax advisor to see how bonus depreciation could uniquely benefit your situation. This proactive approach could provide substantial savings and position your business for future success.