Key Insights on OBBBA and Bonus Depreciation
Thomas C. Lamey, CPA

Recently, a significant tax update has been signed into law, promising profound impacts on business finances. Enter the One Big Beautiful Bill Act (OBBBA), passed on July 4, 2025, which introduces a key provision: permanent 100% bonus depreciation. This update represents a potential game-changer for businesses planning to purchase new equipment, vehicles, or make improvements. Our goal here is to guide you through the changes and highlight how businesses can effectively benefit.

Understanding Bonus Depreciation

  • Businesses can now deduct 100% of the cost of qualifying assets placed in service starting January 20, 2025. This replaces the previous phase-down schedule, which limited deductions to 40% for 2025.
  • Qualifying assets include equipment, machinery, software, certain business vehicles, and qualified improvement property, provided they have a useful life of 20 years or less.
  • Full depreciation deduction in the year of purchase can significantly reduce taxes and enhance cash flow, freeing up funds for reinvestment in areas like staffing and system upgrades.
  • Businesses have more flexibility to time purchases based on operational needs and tax strategy.
  • Note: Not all states may conform to this federal provision, so it's advised to check local tax rules.

Practical Benefits and Use Cases

The ability to fully deduct the cost of eligible assets upfront increases available working capital and can greatly aid strategic planning. Imagine upgrading your computer systems or purchasing a fleet of vehicles—bonus depreciation enhances your financial flexibility to do so effectively. By accelerating deductions, businesses can not only improve cash flow but also invest in expansions or system upgrades as needed.

Strategic Financial Planning

This new law offers a rare opportunity for significant tax savings and strategic financial planning. It’s an appealing option for businesses with pending investments on the horizon, especially given the support this move can provide for growth. We strongly recommend consulting a tax professional to explore how bonus depreciation can be tailored to your business’s specific circumstances.

As business owners, evaluating upcoming purchases and seeking the counsel of a tax advisor can reveal how these changes might benefit your situation. This update opens avenues for optimizing your tax strategy and supporting your financial growth initiatives. Consider taking proactive steps today to maximize your business's potential under this new provision.