OBBB Restores 100% First-Year Bonus Depreciation

The final draft tax legislation modifies the existing bonus depreciation rules which, as of today, only allow businesses a 40% depreciation deduction in the first year that qualifying assets are acquired. Under the “one big beautiful bill”, or OBBB, bonus depreciation in year-one is again increased to 100%--and made the provision permanent for qualified property that is acquired and placed into service on or after January 19, 2025. Yet another elective 100% depreciation deduction is allowed for certain “qualified production property”, or (QPP). This elective additional deduction is temporary and allowed only through 2030. “QPP” is defined to include newly constructed (and some existing) non-residential real estate that is used for manufacturing, production, or refining of defined tangible personal property within in the U.S. The law also increased the IRC Section 179 deduction cap from $1 million to $2.5 million for property placed in service after December 31, 2024.  Phase-outs under Section 179 will now begin at $4 million . For more information on the rules governing bonus depreciation, visit Tax Facts Online. Read More: Link to Q718. Note: Q718, 725, 7912, 7896 and Q8616 are updated.