Big Wins from the One Big Beautiful Bill for Small Businesses

July 24, 2025

The recently enacted One Big Beautiful Bill (OBBB) brings a wave of tax relief and strategic opportunities for small businesses, especially around asset depreciation. If you’re a small business owner or advisor, here’s what you need to know to make the most of these changes in 2025 and beyond.

100% Bonus Depreciation Restored

One of the most impactful changes is the permanent restoration of 100% first-year bonus depreciation for eligible assets placed in service after January 19, 2025. This means businesses can immediately deduct the full cost of qualifying assets, improving cash flow and reducing taxable income.

  • Applies to equipment, computer hardware, software, certain vehicles, and Qualified Improvement Property (QIP).
  • QIP includes interior improvements to non-residential buildings but excludes enlargements, elevators, escalators, and structural framework.
  • Assets placed in service between January 1 and January 19, 2025, qualify for reduced bonus depreciation (40% or 60% depending on production period).

Section 179 Expensing Gets a Boost

OBBBA also enhances Section 179 first-year depreciation for eligible assets placed in service in tax years beginning in 2025, increasing the maximum deduction to $2.5 million (up from $1.25 million). The phase-out threshold rises to $4 million in asset placements (up from $3.13 million), with annual inflation adjustments starting in 2026.

Eligible items include:

  • Same assets as bonus depreciation.
  • QIP, roofs, HVAC systems, fire protection, alarm systems, and security systems for non-residential property.
  • Lodging-related depreciable personal property.
  • Heavy SUVs (6,001–14,000 lbs.) used over 50% for business have a special cap of $31,300.

While Section 179 offers flexibility, it comes with limitations, especially for partnerships, LLCs, and S corporations. In many cases, claiming 100% bonus depreciation may be simpler and more beneficial.

New Incentives for Qualified Production Property

OBBBA introduces 100% first-year depreciation for Qualified Production Property (QPP), non-residential buildings used in manufacturing, production, or refining of tangible goods.

Requirements:

  • Construction must begin between January 19, 2025, and 2029.
  • Property must be placed in service in the U.S. or U.S. possessions before 2031.
  • Excludes areas used for offices, lodging, parking, sales, research, software development, and other unrelated functions.

This provision is a game-changer for manufacturers and producers investing in new facilities.

Final Thoughts

These updates are just a slice of what OBBBA offers. With enhanced depreciation rules, small businesses can better manage their tax liabilities and reinvest in growth. Whether you’re planning major purchases or facility upgrades, now is the time to strategize.

Download a one-page summary of Effective OBBB Dates for Businesses here.

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Michē Needham

Michē Needham

CPA

Partner

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