this a beautiful big billPassed by Congress on July 4, 2025, it is a comprehensive reform of the U.S. tax code.
It includes well-known tax credits and deductions for seniors and higher-income families.
But other groups – including business owners and real estate developers – will also enjoy tax benefits(1).
This is because the law makes permanent the tax incentives introduced in 2017. tax cuts and jobs act During President Donald Trump’s first term(2).
Specifically, a 100% bonus depreciation reserve allows business owners to calculate future depreciation and deduct it from their taxes for the current tax year.
For some, this change could mean huge savings — as much as seven figures. Here’s a closer look at how it works and whether you can benefit.
Businesses pay corporate tax based on net profit (revenue minus costs). But when it comes to taxes, not all costs are created equal.
For tax purposes, capital costs (such as new equipment, furniture, vehicles, and property) are treated differently than operating costs.
Business owners can write off a certain amount of depreciation on these items against their taxes. Traditionally, they do this year by year as the item depreciates in value.
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But thanks to the 100% bonus depreciation rule tax cuts and jobs act And made permanent in one of Trump’s beautiful bills, business owners can accelerate their depreciation tax deductions by carrying forward estimated depreciation to the current tax year.
The idea behind 100% bonus depreciation is threefold:
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Stimulate domestic investment.
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Improve business cash flow.
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Quickly reduce corporate taxes.
A depreciation schedule specifies how depreciation is deducted for different assets over time.
For example, if you own a pizza restaurant and purchase a new pizza oven, you would traditionally be able to write off a portion of the oven’s depreciation each year to offset some of your taxes.
Now, thanks to the 100% bonus depreciation rule, pizza ovens can be fully depreciated in the first year, significantly reducing a restaurant owner’s taxable income and overall tax bill.
The original provision was set to expire in 2027, but now that it’s permanent, business owners have more incentive to invest in equipment and property, and their tax bills may be about to decrease.
The primary beneficiaries of this new rule are business owners seeking capital investment. However, this does not mean that all business investments can be written off quickly.
According to Moss Adams x Baker Tilly and Anderson Business Advisors, business items eligible for bonus depreciation include (3)(4):
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15 years of land improvement: such as hard landscaping, landscaping and lighting (but not the land itself)
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Office furniture and interior decoration (But not including the office building itself)
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Ready-made computers and office software (but not including inventory)
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Vehicles weighing more than 6,000 pounds are used for business more than 50% of the time. Bonus depreciation is based on a business use percentage, so if you only use these vehicles for work 75% of the time, you can only depreciate up to that limit.
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certain production buildings
Property that is used in business only 50% or less of the time or is subject to the Alternative Depreciation System (ADS) is not eligible for bonus depreciation.
Real estate investors can also apply bonus depreciation in a variety of ways. Certain portions of the purchase price of new rental properties may qualify, as well as any structures added to the existing property (such as fences, lights or walls).
All in all, the new write-offs are attractive but also very complex.
It’s important to pay close attention to eligibility rules as well as deadlines, overlapping deductions, state and local taxes, and classification rules.
If you’re a mid-sized business owner with significant capital expenditures each year, these new rules can help you save six or even seven figures over time.
But even small-time real estate investors or mom-and-pop businesses can find some savings in this new rule.
If you are a business owner looking to make a large investment or a landlord with multiple rental properties, contact an experienced accountant or tax attorney to learn how these rules may affect you.
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Congress.gov (1); Bloomberg (2); Moss Adams x Bakery Tilly (3); Anderson Business Advisors (4)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.
