How the One Big Beautiful Bill Revived Bonus Depreciation

Bonus depreciation has long been a valuable tool for business owners looking to reduce taxable income by accelerating deductions for equipment and other capital expenditures. Recent legislative updates have brought new life to this incentive, giving businesses more certainty and flexibility when it comes to planning major investments.

The Original Framework and Phaseout

The Tax Cuts and Jobs Act of 2017 temporarily increased bonus depreciation to 100 percent for qualified property placed in service between 2017 and 2022. However, that full deduction was never meant to last. Starting in 2023, bonus depreciation began phasing out by 20 percent each year until it was set to expire entirely in 2027. This created pressure for businesses to rush purchases before the tax benefits diminished.

The Turning Point

In 2025, lawmakers introduced the One Big Beautiful Bill, a sweeping piece of legislation that included a major revision to the bonus depreciation schedule. Effective for qualified property placed in service on or after January 19, 2025, the bill repeals the scheduled phaseout and restores the 100 percent bonus depreciation rate indefinitely. Businesses no longer need to time their capital expenditures to beat an artificial deadline. They now have the clarity to invest when it makes the most sense for their operations.

Key Benefits

Permanent 100 percent deduction. Businesses can now write off the full cost of qualifying assets in the year they are placed in service, without the concern of diminishing benefits in future years.

Applies to a wide range of properties. Eligible assets include tangible property with a useful life of 20 years or less. This includes machinery, vehicles, computer systems, and certain building improvements.

Enhanced financial flexibility, Companies are no longer forced to accelerate purchases to lock in tax savings. This allows for better alignment between operational needs and capital spending.

Impact across industries Sectors like construction, logistics, healthcare, and manufacturing are expected to benefit most, as they frequently rely on large-scale equipment and technology investments.

What to Do Now

If you are a business owner or CFO, this change presents an opportunity to revisit your capital investment strategy. Work with your tax advisor to:

• Reassess the timing of equipment purchases

• Incorporate bonus depreciation into your long-term financial modeling

• Ensure that asset classifications and documentation meet IRS requirements

• Explore how this interacts with other tax provisions like Section 179

A More Predictable Tax Landscape

The permanent return of 100 percent bonus depreciation marks a shift toward stability in the tax code. By removing uncertainty and restoring the full deduction, the One Big Beautiful Bill allows businesses to focus on growth rather than compliance deadlines.

This is not just about writing off assets. It is about enabling smarter financial decisions, promoting long-term investment, and helping businesses stay competitive in an evolving economic environment.