I am not a CPA or even an accountant, and we are crystal clear in engagement documents with our clients that we do not offer tax, securities, or legal advice. Our direction to them is they must look to their own CPAs, attorneys, and financial advisors to help understand the various tax and legal ramifications of the negotiations when we are representing a client who is selling their company.

Having said that, the biggest business news of the past few weeks is the passage of the One Big Beautiful Bill Act (OBBBA), which has a significant and positive impact on depreciation rules. I studied this section of the bill carefully and will try to explain its tax benefits here so the producers throughout our industry get a summary of its provisions, expressed in layman’s terms. Read below, because if you are purchasing a new building or renovating an existing property, or your business is planning equipment purchases, software upgrades, or other major investments, this update could have a meaningful impact on your tax strategy.

The biggest news is that the 100 percent bonus depreciation is back. Before OBBBA, bonus depreciation was phasing out and was set to drop to 40 percent in 2025. With the new law, 100 percent bonus depreciation is now permanently reinstated for qualified property acquired, which was placed in service after January 19, 2025. This includes most tangible personal property with a recovery period of 20 years or less, such as land improvements, machinery, computers, and furniture and equipment. That means producers and manufacturers alike can now fully expense new and used assets in the year they are placed in service, rather than spreading deductions over several years.

The popular Section 179 expensing increases the deduction limit to $2.5 million, with a new phaseout threshold of $4 million. This allows businesses, particularly small and midsize companies, to immediately expense qualifying property without relying solely on bonus depreciation. The benefit or advantage of Section 179 is that certain states do not allow bonus depreciation, but generally, states allow the expensing under Section 179.

And there is a new incentive to help spur investments in our capex-intensive industry. The law introduces a special depreciation allowance for “qualified production property” placed in service after the date of enactment and before 2031. This provision is particularly favorable for manufacturers and other capital-intensive industries investing in domestic production equipment, tools, and fixtures.

So what should you do now that our industry has been handed these great tax incentives? First, revisit your asset purchase plans for the remainder of 2025, and work with your tax advisor to determine which assets qualify for bonus depreciation or Section 179. Here are a few questions and answers commonly brought up by producers:

  • What types of assets qualify for 100 percent bonus depreciation under OBBBA? Most new and used tangible personal property with a recovery period of 20 years or less qualifies.
  • Can you claim both bonus depreciation and Section 179 for the same asset? In some cases, yes. However, Section 179 is generally applied first. Your tax advisor can help you decide which approach offers the best benefit based on your asset types and business income.
  • How does the OBBBA impact real estate purchases or renovations? While buildings themselves don’t qualify for bonus depreciation, a cost segregation study can identify components that do. This is especially useful for commercial or investment property owners.
  • Do these changes apply to state taxes, too? Not necessarily. Many states don’t conform to federal bonus depreciation rules, but they may allow Section 179 expensing.

These updates provide real opportunities to reduce your tax liability and improve cash flow. With the reinstatement of 100 percent bonus depreciation and expanded Section 179 limits, the OBBBA gives concrete producers a real opportunity to rethink their capital spending strategies for 2025. These changes aren’t just technical; they are practical tools for managing cash flow and accelerating growth. I encourage every producer to look at their year-end plans now so they don’t leave money on the table.