Bonus Depreciation Under the One Big Beautiful Bill

Until recently, bonus depreciation was on track to phase out entirely by 2027, leaving business owners with shrinking tax deductions and added uncertainty around capital planning.

Then, on July 4, 2025, President Trump signed into law One Big Beautiful Bill Act, locking-in 100% bonus depreciation for qualifying property placed in service after January 19, 2025.

In this article, we explain what changed, what it means for your business and the steps you can take now to make the most of this renewed tax advantage.

Bonus depreciation was in flux — until now
For years, bonus depreciation has been a powerful tax tool for businesses investing in equipment, vehicles and other qualified assets. Originally expanded to 100% under the 2017 Tax Cuts and Jobs Act, the legislation contained a phaseout under a clearly defined schedule with bonus depreciation set to disappear entirely by 2027.

Here’s how the phaseout was structured:

• 2023: 80% deduction
• 2024: 60% deduction
• 2025: 40% deduction
• 2026: 20% deduction
• 2027 and beyond: 0% deduction

Many business leaders questioned whether Congress would intervene before 2027. And if so, when and how? That ambiguity made some companies cautious about timing significant capital investments, unsure whether to accelerate purchases or wait for potential legislative changes.

The question is now settled. The One Big Beautiful Bill eliminates the phaseout schedule entirely and restores 100% bonus depreciation for qualifying property placed in service after January 19, 2025.

Let’s take a look at the details.

Bonus depreciation under the one big beautiful bill
The One Big Beautiful Bill marks the first time Congress has made 100% bonus depreciation continuously ongoing for qualified property.

Specifically, the terms of the legislation:

• Eliminate the phaseout schedule. The declining percentages scheduled to reduce bonus depreciation through 2027 have been struck from the tax code.
  
• Maintain existing eligibility rules. The definition of qualified property, as outlined in IRC §168, remains the same: tangible, depreciable business assets with a recovery period of 20 years or less, including machinery, equipment, certain vehicles and improvements.
• Apply retroactively to January 19, 2025. Any qualifying property placed in service on or after this date is eligible for the full deduction under the new law.

By making 100% bonus depreciation stable, the law reduces the need to base investment decisions on expiring tax incentives and supports more predictable capital budgeting. Businesses can plan major investments with clearer visibility into tax implications, knowing the deduction will still be there.

How long-term bonus depreciation reshapes capital planning
The change to established and ongoing 100% bonus depreciation has the potential to reshape how and when businesses most effectively deploy capital.

Key implications include:

• More flexibility in timing. Without a declining schedule to work around, capital purchases can be timed to align with operational and market conditions rather than expiring incentives.
• Support for long-term investments. Projects that span multiple years — such as facility upgrades or fleet replacements — can still fully benefit from bonus depreciation even if placed in service well into the future.
• Industry impact. Sectors that rely heavily on capital assets, such as manufacturing, logistics, construction and transportation, stand to benefit most from the change.

Next steps for business leaders
The passage of the One Big Beautiful Bill is a significant change to the tax landscape and an opportunity to strengthen your capital strategy. With 100% bonus depreciation now enduring, business leaders may want to reassess investment priorities and ensure teams are aligned around the new rules.

Consider taking these steps:

• Reevaluate your investment pipeline. Review planned and potential capital projects to identify where accelerated purchases or expansions could create greater tax efficiency.
  
• Refine financial projections. Incorporate permanent 100% expensing into cash flow models, ROI analyses and long-term budgets to better reflect true after-tax costs.
  
• Engage tax and financial advisors. Confirm how bonus depreciation interacts with other provisions, such as Section 179, and ensure qualifying property is properly documented and reported.
  
• Align internal stakeholders. Ensure finance, operations and procurement teams are working from a shared set of updated assumptions when evaluating investment decisions.
  
• Monitor market dynamics. In capital-intensive sectors, anticipate increased demand for equipment, vehicles and materials as businesses act on the new law.

By addressing these areas now, you can position your business to make more informed, timely and tax-efficient investment decisions in the years ahead.

What assets qualify and how Comerica can help
Under the One Big Beautiful Bill, qualified property eligible for 100% bonus depreciation includes tangible, depreciable business assets with a recovery period of 20 years or less. This includes a wide range of capital investments such as:

• Heavy machinery and equipment. From excavators and bulldozers to CNC machines and industrial compressors, these assets are essential for operations in construction, manufacturing, and agriculture.
• Commercial vehicles. Whether you're expanding a delivery fleet, upgrading long-haul trucks, or investing in specialized transport vehicles, Comerica provides financing options that align with your operational needs and tax strategy.
• Facility improvements and infrastructure upgrades. Capital projects like warehouse expansions, loading dock installations, and energy-efficient retrofits also qualify under the updated depreciation rules.

Comerica can assist with financing these improvements, helping businesses enhance productivity and meet sustainability goals while optimizing tax efficiency. Our advisors can help structure leases or loans to maximize the benefits of bonus depreciation while supporting long-term growth. Explore Comerica’s Heavy Equipment Group offerings or connect with a Comerica advisor to start the conversation.

Connect with Comerica today to start the conversation.