With the passage of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, Congress has delivered long-term certainty to business owners by permanently reinstating 100% bonus depreciation. This provision allows businesses to immediately deduct the full cost of qualifying assets in the year they’re placed into service, a significant planning tool for companies managing capital expenditures and cash flow.
The change is already in effect and applies to property acquired and placed in service after January 19, 2025.
Why This Matters
Under prior law, 100% bonus depreciation had already expired and was scheduled to phase down to 20% by 2026 before disappearing altogether. In 2025, the rate was just 40%—but OBBBA reverses course. Business owners can once again write off the full cost of eligible equipment, vehicles, and technology upgrades up front, rather than depreciating them over time.
This shift is more than just a tax break; it’s a strategic opportunity to align purchasing decisions with long-term growth planning.
What Qualifies
Most tangible business property with a recovery period of 20 years or less will qualify, including both new and used assets. Examples include:
- Machinery, manufacturing equipment, and tools
- Business vehicles under applicable IRS limits
- Technology systems, servers, and off-the-shelf software
- Office and retail furnishings
- Certain improvements to nonresidential real property
The new rules also extend to “qualified production property,” including manufacturing and refining facilities that would otherwise be subject to a 39-year depreciation schedule. In these cases, businesses may now split the facility into production and administrative portions and apply 100% bonus depreciation to qualifying areas.
What This Means for Ohio Businesses
Businesses across industries will benefit, but the impact may be especially significant for Ohio companies in construction, agriculture, logistics, and manufacturing, where large capital purchases are routine. Fleet vehicles, heavy equipment, and facility upgrades can now be fully deducted in the first year of use, offering immediate relief on federal tax returns.
However, businesses should weigh the benefits of accelerated deductions against long-term tax planning. While immediate expensing lowers current-year tax liability, it can also create uneven taxable income in future years. Strategic forecasting is key, especially for companies with volatile income or future expansion plans.
Integration with State Tax Law
It’s important to note that Ohio’s conformity to federal bonus depreciation is partial. While Ohio aligns with many federal provisions, bonus depreciation amounts may need to be added back for state tax purposes, only to be deducted over time under separate depreciation rules. Business owners should consult with tax advisors to understand how these changes affect both federal and state returns.
Planning Considerations
Bonus depreciation is most valuable when paired with thoughtful planning and execution. Companies considering new investments in equipment or facilities should evaluate whether accelerating acquisitions in 2025 or 2026 makes sense in light of this permanent incentive. This is particularly relevant for businesses navigating growth, financing decisions, or ownership transitions.
How We Can Help
At Carlile Patchen & Murphy, our Business Law and Tax attorneys are ready to help you make the most of these new provisions. From evaluating qualified property to aligning purchases with tax strategies, we’ll help ensure that your business maximizes its benefit under the new law while staying compliant at both the federal and state levels.
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