Permanent Reinstatement of 100% Bonus Depreciation

The OBBBA permanently restores 100% bonus depreciation for qualifying assets acquired and placed in service after Jan. 19, 2025. This change eliminates the phasedown of bonus depreciation introduced in earlier legislation and gives businesses the ability to:

• Immediately deduct the full cost of assets with shorter recovery periods (e.g., 5, 7, or 15-year property)
• Enhanced value of cost segregation studies
• Increase year-one tax savings and improved cash flow

This provision applies to tangible property with shorter recovery periods, including assets identified in cost segregation studies (such as equipment, fixtures, and qualified improvement property).

Increased Section 179 Expensing Limits

OBBBA raises the Section 179 deduction limit to $2.5 million, with a phase-out threshold of $4 million (both indexed for inflation). This provides greater flexibility for businesses investing in:

• HVAC systems, fire protection, and security equipment
• Office furniture and fixtures
• Tangible personal property used in rental activities

Section 179 offers a simple and immediate way to fully expense qualifying purchases, particularly for businesses with smaller-scale investments that may not use bonus depreciation, or who may be subject to state depreciation rules that differ from the new federal rules.