The One Big Beautiful Bill Act, enacted on July 4, 2025 as Public Law 119-21, introduced a wide range of changes that will impact tax returns for the 2025 tax year and beyond.
There are several changes to the depreciation calculations for businesses.
Bonus Depreciation
The Tax Cuts and Jobs Act of 2017 included a phase-out of bonus depreciation, with the amount in 2025 being 40% and for 2026 being 20%. The OBBB reinstated the 100% expensing of qualified assets in the year they were placed into service. Qualified property acquired and placed in service after January 19, 2025, qualifies for the 100% bonus depreciation. This will be a permanent change.
Qualified assets now include manufacturing buildings. Manufacturing buildings were depreciated for 39 years before the OBBB changes.
Section 179 Deduction
The OBBB changed the section 179 limits for tax year 2025. The deduction limit increased to $2,500,000, and the deduction begins to phase out when the total cost of qualifying property placed in service exceeds $4,000,000.
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