Contact Us

100% Depreciation

One of the most transformative shifts in business taxation in recent years. The One Big Beautiful Bill Act (OBBBA) doesn’t just revive bonus depreciation—it supercharges it. Let’s unpack a few deeper implications and strategic angles that businesses and investors might want to consider:

Strategic Impacts of 100% Bonus Depreciation

  • Accelerated ROI: Immediate expensing means faster return on investment. Businesses can reinvest tax savings into growth, hiring, or innovation.
  • Tax Planning Leverage: Firms can time asset purchases to maximize deductions in high-income years, smoothing out taxable income volatility.
  • M&A Incentives: Acquiring companies with depreciable assets becomes more attractive, as buyers can write off the full value immediately.
  • Real Estate Twist: With QPP now included, certain building components used in production (like HVAC systems or structural improvements) may qualify—this is a game-changer for manufacturers and refiners.

Effective July 4, 2025, the One Big Beautiful Bill Act restores full and immediate expensing for domestic R&D expenditures under Section 174 of the U.S. Tax Code. This long-awaited legislation presents a significant opportunity for companies engaged in product and process development to enhance their tax planning strategies.

Key Highlights

  • Full and immediate expensing of domestic R&D costs begins with the 2025 tax year
  • Retroactive application available to 2022 for small businesses meeting the gross receipts test (generally $31 million or less)
  • All taxpayers may accelerate remaining amortized R&D costs from 2022–2024 starting in 2025

Strategic Implications

Companies investing in innovation can now:
  • Deduct eligible R&D expenses in the year incurred
  • Improve cash flow and reduce taxable income
  • Combine full expensing with the R&D Tax Credit for enhanced benefit

What Counts as Qualified Production Property (QPP)?

While IRS guidance is still evolving, early interpretations suggest QPP includes:

  • Structural components of buildings used primarily in manufacturing or refining
  • Specialized production facilities (e.g., clean rooms, distillation towers)
  • Integrated systems like conveyors or automated warehousing tied to production
This provision is temporary, so businesses may want to rush to capitalize before it sunsets—currently slated to expire after the 2028 tax year unless extended

Bonus Depreciation Update

100% bonus depreciation will not be in effect in 2027. Under current law, the phase-out schedule is as follows:
  • 40% bonus depreciation in 2025
  • 20% bonus depreciation in 2026
  • 0% bonus depreciation beginning in 2027

However, the One Big Beautiful Bill Act reinstates 100% bonus depreciation for qualifying property placed in service after January 19, 2025. This change provides a renewed opportunity for businesses to accelerate depreciation and reduce taxable income on qualifying capital investments.

Bonus Depreciation
vs. Section 179

It’s worth noting that while both allow immediate expensing, bonus depreciation:
  • Has no annual dollar limit (unlike Section 179)
  • Can apply to used property, not just new
  • Is available to larger businesses too, not just small enterprises
If you’re thinking about how this might affect your business—or want help modeling the tax impact—I’d be happy to dive deeper. Want to explore how this compares to past tax reforms or what industries stand to gain the most?
Schedule Your FREE Consultation Today

R&D Tax Credit Overview

The R&D Tax Credit remains one of the most valuable incentives in the U.S. tax code. It provides a dollar-for-dollar reduction in federal tax liability for qualifying research activities and expenses.

Qualified Research Expenses (QREs)

Eligible costs may include:
  • Wages for domestic employees directly involved in qualified research
  • Supplies used in the research process
  • Contract research (typically 65% of the cost is eligible)
  • Certain cloud computing expenses

Complimentary Consultation

We offer a no-cost preliminary assessment to estimate your potential tax savings. Our team will review your qualified data and provide guidance on how to maximize both the R&D Tax Credit and full expensing benefits.

Schedule your consultation today to determine eligibility and begin optimizing your tax position.