Maximizing Business Savings with New Bonus Depreciation

A major tax update was recently signed into law that could significantly impact your business finances. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was passed, introducing a key provision: permanent 100% bonus depreciation. This can be a game-changer for businesses planning to purchase new equipment, vehicles, or make improvements.

Understanding the Change

Under the new law, businesses can now deduct 100% of the cost of qualifying assets placed in service starting January 20, 2025. This reverses the previous phase-down schedule that reduced the bonus depreciation to 40% for 2025.

What Qualifies?

• Equipment and machinery with a useful life of 20 years or less
• Qualified improvement property
• Computer software
• Certain business vehicles (check for weight and use specifications)

Benefits of Bonus Depreciation

With this provision, businesses can deduct the full cost of eligible assets—like computers, furniture, or building improvements—in the year they are placed in service. This upfront depreciation reduces taxes in the purchase year, increasing available working capital. Accelerated deductions help improve cash flow, allowing you to reinvest in areas like staffing, system upgrades, or expansions.

Strategic Flexibility

The law provides businesses with more flexibility to time purchases based on operational needs and tax strategy. However, not all states may conform to this federal provision, so it’s crucial to check local tax rules.

Real-world Applications

Consider potential use cases, such as buying a fleet of new vehicles or upgrading software systems. This strategy can significantly enhance your financial planning and growth trajectory.

Consult a Professional

While the opportunities are considerable, deciding the best approach requires careful planning. Always consult a tax professional to understand how these changes can specifically benefit your situation.

In summary, the OBBBA offers a unique opportunity for upfront tax savings and strategic financial planning. It may be an ideal move for businesses already planning investments. Evaluate your upcoming purchases and consult a tax advisor to see how bonus depreciation could be advantageous for your business growth.