Impact of One Big Beautiful Bill Act on Depreciation

This technical report outlines the key provisions of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, which reinstates 100% bonus depreciation under Section 168(k) for qualified property placed in service after January 19, 2025. It details changes to the Section 179 expensing cap, which is raised to $2.5 million, and the business interest limitation, which is now based on EBITDA instead of EBIT. The report explains the types of property that qualify for bonus depreciation and Section 179 expensing, emphasizing the importance of business use requirements and IRS standards. It also discusses the implications for various asset categories, including aircraft and heavy equipment, and the necessary documentation to substantiate business use. Additionally, the report highlights potential state-level discrepancies with federal rules and offers practical steps for businesses to optimize their tax positions under the new regulations. Overall, the OBBBA represents a significant shift in federal depreciation and expensing strategies for capital-intensive industries.