Bonus Depreciation Made Permanent: A Strategic Opportunity for Business Owners

On July 4, 2025, President Donald Trump signed into law a sweeping legislative package—known colloquially as the One Big Beautiful Bill Act (OBBBA)—as a cornerstone of his second-term agenda. The OBBBA builds on the 2017 Tax Cuts and Jobs Act (TCJA), making many of its key provisions permanent, while also introducing new business-friendly tax incentives.

What Is 100% Bonus Depreciation?

“Bonus depreciation” allows businesses to deduct the full cost of qualifying assets in the year they’re placed into service, rather than spreading it out over several years. The Act restores and makes permanent 100% bonus depreciation under IRC Section 168(k) for qualifying property acquired and placed into service on or after January 19, 2025 Tangible personal property (e.g., machinery, equipment) with a recovery period of 20 years or less. Without OBBBA, bonus depreciation had been scheduled to phase down to 40% in 2025, 20% in 2026, and completely expire in 2027.

What Qualifies as “Qualified Property”?

• Tangible personal property with a recovery period of 20 years or less—e.g., machinery, furniture, fixtures, vehicles.

• Qualified Improvement Property (interior improvements to nonresidential real estate).

• Qualified Production Property (QPP): non-residential real property used for manufacturing, refining, or production—with construction beginning after Jan 19, 2025, and in service before Jan 1, 2029; property must be placed in service by Jan 1, 2031, and meet strict qualification criteria.

What It Means for Businesses

Immediate Financial Benefits

• Businesses can immediately expense the full cost of eligible assets in the year they’re placed into service—providing a major boost in cash flow, reducing current tax liability, and enhancing return on investment.

Planning & Investment Incentives

• OBBBA encourages front-loading capital investments—especially in equipment, improvements, and production facilities.

• Cost segregation studies become especially valuable, allowing accelerated depreciation on building systems that qualify.

Strategic Considerations

• Businesses should reassess timing of purchases: acquiring assets before or after Jan 19, 2025 can mean the difference between standard depreciation and full bonus write‑off.

• Consider interplay with other provisions: immediate R&D expensing (for domestic R&E), permanent Section 199A qualified business income deductions, more generous business interest expense limits, and expanded QSBS benefits.

Key Bonus Depreciation Details

Provision	Effective Dates	Notes
100% Bonus Depreciation	Property placed in service after Jan 19, 2025	Permanent under OBBBA
Without OBBBA (old law)	Phase-down: 40% in 2025, 20% in 2026, then 0%	Full phase-out by 2027
Qualified Production Property	Construction after Jan 19, 2025; in service by Jan 1, 2031	Non‑residential production usage
Cost segregation benefits	Applies when eligible property is part of an existing building	Accelerates bonus depreciation

What Businesses and Taxpayers Should Do Now

1. Review capital spending plans: Look at proposed asset purchases planned in 2025 and beyond.

2. Engage tax and cost‑segregation advisors: Ensure assets are properly classified to maximize bonus depreciation.

3. Coordinate with broader tax strategy: Factor in other permanent benefits like R&D expensing and QBI, while watching for phased or expiring provisions (e.g., SALT changes, child credits).

4. Consider entity structure and timing: Planning entity-level decisions or partnership allocations may unlock optimal benefits.

The OBBBA’s reinstatement of 100% bonus depreciation for property placed into service after January 19, 2025 is a major win for businesses investing in capital assets. With permanent first-year expensing restored under Section 168(k), companies now have a powerful tool to accelerate tax deductions and optimize cash flow. But successful planning will depend on timing, asset classification, and interplay with other provisions in the broader tax package.

At Lucrum Legal Accounting, our team is ready to assess your asset purchases, run cost segregation analyses, and build a proactive plan around the new OBBBA provisions. Whether you’re expanding your firm, upgrading equipment, or developing commercial property, we’ll ensure you capture every available tax advantage. Let us help you turn this policy shift into a powerful financial opportunity.