How Accelerated Depreciation and 100% Expensing Under OBBB Can Benefit Your Business

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What the One Big Beautiful Bill Means for Capital Investment Planning?

The U.S. House of Representatives recently passed the One Big Beautiful Bill (OBBB), which contains significant tax reform provisions that could benefit business owners across industries. Among the most impactful measures are changes to accelerated depreciation and 100% expensing, designed to encourage business investment by improving immediate tax write-offs for capital assets.

What’s New in the OBBB?

Under the current proposal, businesses can take advantage of bonus depreciation to fully expense qualified property acquired and placed in service between January 19, 2025, and December 31, 2029. This means you can deduct the entire cost of eligible assets in the year they are placed into service, rather than spreading depreciation over several years.

This provision is a form of accelerated depreciation that aims to support growth and modernization by reducing the after-tax cost of business investment.

In addition, the bill increases the maximum amount a taxpayer may expense under Section 179 from $1 million to $2.5 million. Section 179 allows businesses to deduct the full purchase price of qualifying equipment or software purchased or financed during the tax year, providing an immediate cash flow benefit.

What Qualifies for Bonus Depreciation and Section 179?

Qualified property typically includes:

• Machinery and equipment

• Business vehicles

• Computers and software

• Office furniture

• Certain improvements to nonresidential real property

It's important to note that while both bonus depreciation and Section 179 allow for full expensing, they differ in qualification criteria and usage limits. Bonus depreciation has no income limitation and can result in a net operating loss, while Section 179 is limited by taxable income and has a phase-out threshold.

What This Means for Your Business

If you are planning capital investments in the coming years, the accelerated depreciation rules in the OBBB could significantly lower your tax liability. By leveraging 100% expensing, you can reinvest tax savings back into your operations, boost growth, and maintain a competitive edge.

At Y Advisory, we work with businesses to design tax strategies that align with both short- and long-term goals. If you're considering new equipment, software, or other qualified assets, now is the time to review your investment timeline to maximize tax benefits under the proposed legislation.

Final Thoughts

While the bill has only passed the House and still requires Senate approval and presidential signature, businesses should begin planning for these potential changes now. The proposed updates to accelerated depreciation and Section 179 expensing could create powerful incentives for capital investment from 2025 through 2029.

Need help navigating these upcoming changes?Contact Y Advisory today to schedule a consultation and see how your business can take full advantage of the latest tax opportunities.