The Biggest Tax Change for Businesses Since 2017
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law.
The game-changer: 100% bonus depreciation is now permanent for property placed in service after January 19, 2025.
What this means: You can immediately write off 100% of qualifying equipment and building improvements in year one—not spread over 5, 10, or 39 years.
Who benefits: Any business that buys equipment, renovates buildings, or makes capital investments.
Author’s note (Sam Young, EA): I’ve guided timing of purchases and 3115 catch‑ups across the Jan 19 cutoff—these steps maximize first‑year cash savings in practice.
What Was Happening Before This Law
Bonus depreciation was disappearing:
- 2023: 80%
- 2024: 60%
- 2025: Was supposed to be 40%
- 2026: Was going down to 20%
- 2027: Was going to be eliminated completely
Businesses were panicking because they were losing one of the most powerful tax deductions.
What Changed (July 4, 2025)
The One Big Beautiful Bill Act:
- ✅ Restored 100% bonus depreciation
- ✅ Made it permanent (no more phase-downs)
- ✅ Doubled Section 179 limit to $2.5M
- ✅ Applies to property placed in service after January 19, 2025
This is huge because businesses can now plan long-term around these tax benefits instead of worrying they'll disappear.
Bonus Depreciation vs Section 179: Which to Use?
Both let you write off equipment immediately. Here's the difference:
| Feature | Section 179 | Bonus Depreciation |
|---|---|---|
| Annual limit | $2.5M | Unlimited |
| Can create a loss? | No | Yes |
| Income requirement | Must have business income | No limit |
| Best for | Profitable businesses | Any business, especially with losses |
Strategy: Use Section 179 first (up to $2.5M), then bonus depreciation for anything over that amount.
Real Examples: How Much Can You Save?
Restaurant Example
Property value: $1M
Cost segregation finds: $406K in equipment/fixtures (kitchen, POS, fixtures, flooring)
100% bonus depreciation: Write off $406K in year one
Tax savings: $406K × 35% = $142K
What qualifies: Kitchen equipment, bar equipment, furniture, decorative fixtures, POS systems
Retail Store Example
Property value: $2.32M
Cost segregation finds: $504K in fixtures/equipment
100% bonus depreciation: Write off $504K in year one
Tax savings: $504K × 35% = $176K
What qualifies: Display fixtures, shelving, signage, lighting, POS equipment, flooring
Manufacturing Facility Example
Typical benefit: 25-45% of building cost gets accelerated
What qualifies:
- All production equipment
- Process-specific electrical and plumbing
- Material handling systems (conveyors, lifts)
- Specialized HVAC for equipment
Key point: Manufacturing facilities often have the highest percentage of qualifying property.
Your Action Plan
This year:
- Review upcoming equipment or building purchases
- Get a cost segregation study for recent property purchases
- Time major purchases to maximize tax benefits
- Talk to your CPA about implementation
If you bought property in 2023-2024:
- You can still get bonus depreciation retroactively
- File Form 3115 with your return
- Claim "catch-up" depreciation for prior years
If you're buying property in 2025+:
- 100% bonus is permanent—no rush
- But still maximize benefits with cost segregation
- Plan purchases around your business income
Common Questions
Q: What property qualifies for bonus depreciation?
A: Equipment, machinery, furniture, fixtures, and certain building improvements (HVAC, lighting, flooring). Generally anything with a 20-year or shorter depreciation life.
Q: Do I need a cost segregation study?
A: For buildings worth $500K+, yes. It identifies which components qualify for faster depreciation and bonus depreciation. Without it, you'll miss most of the benefit.
Q: Can I do this on properties I bought years ago?
A: Yes! File Form 3115 to change your accounting method. You'll catch up on all the depreciation you should have claimed.
Q: Is this complicated?
A: The concepts are simple, but implementation requires professionals (cost segregation specialist + CPA). The ROI is huge—typically 10-50x.
Q: What if my state doesn't conform to federal bonus depreciation?
A: Some states (like California) don't follow federal bonus depreciation rules. You might have different state vs federal depreciation. Your CPA will handle this.
Why This Law Matters
Before the One Big Beautiful Bill Act, businesses were facing the elimination of bonus depreciation. That would have been devastating for capital-intensive businesses.
Now it's permanent. Businesses can:
- Plan long-term capital investments
- Know their tax benefits won't disappear
- Make bigger investments with confidence
For brick-and-mortar businesses especially, this is one of the most valuable tax benefits available.
Next Steps
Sources
- 26 U.S.C. §168(k) — Special allowance for certain property (bonus depreciation): https://www.law.cornell.edu/uscode/text/26/168
- IRS Publication 946 — How to Depreciate Property: https://www.irs.gov/publications/p946
- IRS Cost Segregation Audit Techniques Guide: https://www.irs.gov/businesses/cost-segregation-audit-techniques-guide
- Form 4562 (Depreciation and Amortization): https://www.irs.gov/forms-pubs/about-form-4562
Disclaimer: Educational content only. Consult qualified tax professionals for your specific situation.