The "Big Beautiful Bill": 100% Bonus Depreciation and What It Means for You

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently restores 100% bonus depreciation for most business assets. Here's what every business owner needs to know.

The "Big Beautiful Bill" (formally the One Big Beautiful Bill Act, or OBBBA, signed into law on July 4, 2025) permanently restores and locks in 100% bonus depreciation (additional first-year depreciation under IRC Section 168(k)) for most qualifying business assets acquired and placed in service after January 19, 2025.

This is a major win for business owners because it lets you immediately deduct the full cost of eligible investments in the year you place them in service, instead of spreading deductions over 5–39 years via regular MACRS depreciation. It dramatically accelerates tax savings, improves cash flow (you can often finance purchases and still deduct 100% right away), reduces current-year taxable income, and makes large capital investments far more attractive. It applies to both new and certain used property, with no overall dollar cap (unlike Section 179).

Key Benefits for Business Owners

• Immediate cash tax savings: A $500,000 piece of machinery bought and used in 2025+ can create a $500,000 deduction in year 1 (subject to your tax bracket and other limits), potentially saving tens or hundreds of thousands in taxes upfront.
• Better financing and reinvestment: You can borrow or use credit to buy assets and still get the full write-off immediately.
• Planning flexibility: You can elect out of 100% bonus (or elect a lower 40%/60% rate in the first applicable year) or pair it with Section 179 expensing.
• Growth incentive: Especially helpful for manufacturers, real estate investors, and any business buying equipment or improving facilities.
• Permanent: No phase-out like before (it was heading to 0% by 2027 without this bill).

It also expands Section 179 immediate expensing (separate but complementary): The limit is now permanently $2.5 million (phased out dollar-for-dollar above $4 million in total qualifying purchases), indexed for inflation going forward.

What Can You Invest In for a 100% Deduction?

Here's what qualifies for 100% immediate write-off (bonus depreciation or the new QPP rules). Always confirm "acquired after Jan. 19, 2025" and "placed in service" rules, plus your specific facts (original use, business use percentage, etc.).

1. Standard 100% Bonus Depreciation Assets (Permanent, Broad Category)

Tangible MACRS property with a class life of 20 years or less, plus a few others:

• Machinery, equipment, and tools — Factory machines, restaurant/kitchen equipment, medical/dental gear, construction equipment, etc.
• Office furniture, fixtures, and furnishings — Desks, chairs, shelving (typically 7-year property).
• Computers, peripherals, and off-the-shelf software.
• Qualified Improvement Property (QIP) — Interior improvements to nonresidential buildings: new lighting, HVAC (non-structural), flooring, walls/partitions, ceilings, electrical/plumbing upgrades for the interior. (Does not include building enlargement, elevators, or structural components.)
• Certain vehicles — Business-use trucks, vans, heavy SUVs (over 6,000 lbs GVWR often qualify for full 100% without luxury-auto caps); lighter passenger autos qualify but are subject to annual depreciation limits.
• Land improvements — Fences, sidewalks, landscaping (15-year property).
• Farm equipment and specified plants (farming businesses can elect this).

2. New Qualified Production Property (QPP) – 100% Expensing (Elective, Temporary Window)

This brand-new category under Section 168(n) is a game-changer for manufacturers: You can elect 100% immediate deduction on qualifying portions of nonresidential real property (i.e., factory/warehouse buildings or structural components) used as an integral part of qualified production activities in the U.S. or possessions.

Qualifying activities generally involve substantial transformation of tangible personal property (manufacturing, certain agricultural/chemical production, or refining). Examples: turning raw materials into finished goods in a factory. Mere assembly, packaging, storage, or retail food/beverage prep does not qualify.

What can be deducted at 100%: Structural walls, general lighting, HVAC, plumbing, insulation, etc., in the production areas of the building, as well as the building itself (or portions) if it meets the rules.

Timing: Construction must generally begin after January 19, 2025 (and before 2029 in most cases), and be placed in service by Dec. 31, 2030 (or 2031 in some rules). An election is required on your return; recapture applies if you dispose of it within 10 years.

This effectively turns what used to be 39-year straight-line depreciation on factory buildings into a full immediate write-off for qualifying manufacturing investments.

3. Section 179 Expensing (Up to the New $2.5M Limit)

You can use this for many of the same assets above (plus some qualified real property like roofs, HVAC, fire protection, security systems for nonresidential buildings) when bonus doesn't apply or you want to pick and choose.

Important Notes

• Used property often qualifies for bonus depreciation if it meets the acquisition rules (not from a related party, etc.).
• State conformity varies — some states don't follow the federal 100% bonus or QPP rules.
• Recapture and limitations still apply in some cases (e.g., if business use drops below 50%, or for QPP dispositions).
• Sound recording productions — a niche new addition that can also qualify in certain cases.