The passage of the One Big Beautiful Bill Act (OBBBA) resulted in significant changes to the U.S. Internal Revenue Code, many of which are aimed at helping companies invest in growth.
Among them are key changes to Section 179, which allows businesses to write off the full value of large investments—including machinery, office equipment, and vehicles—in the same year of purchase rather than recovering the cost of those purchases at a depreciated rate over time. The legislation also includes the return of 100% bonus depreciation, along with a new special depreciation allowance focused on property used for production purposes.
Continue reading to learn more about Section 179 and bonus depreciation updates under OBBBA, how the new provisions will impact your business and your industry, and how to plan for the current tax season and beyond.
What Is Section 179?
Section 179 of the tax code is an expense deduction for businesses. Especially appealing to small and medium-sized enterprises, it allows companies to recover the full cost of qualifying investments in the same year they were purchased, rather than spreading out the deductions over several years.
The immediate and long-term benefits of Section 179 are many. By allowing businesses to maximize their deductions on both new and used equipment, it frees up additional cash flow and encourages companies to invest more in the early stages of the business, which can help to accelerate growth.
Currently, qualifying property under Section 179 includes:
- Machinery and equipment (manufacturing, industrial, construction)
- Desktop and laptop computers, off-the-shelf software
- Professional electronics (cameras, sound systems)
- Certain building improvements to nonresidential real property (e.g., roof replacement, HVAC upgrades, fire suppression systems, and alarms and security)
- Office furniture, fixtures, and equipment
- Business vehicles
Section 179 and Bonus Depreciation Updates
Under OBBBA, corporate taxpayers saw two key changes to Section 179:
- The expense limit increased from $1.25M to $2.5M, meaning taxpayers can immediately deduct from their annual tax bill the full cost of qualifying large expenses (up to $2.5M).
- The phase-out threshold increased from $3.13M to $4M, with amounts adjusted annually for inflation beginning in 2026. Phase-out means the deduction begins to reduce (dollar for dollar) once the total equipment purchases exceed the $4M threshold.
OBBBA also permanently restored 100% bonus depreciation for eligible assets acquired and placed in service after January 19, 2025. In addition, it introduces a new 100% depreciation for qualified production property (QPP) acquired and placed in service after January 19, 2025 and before January 1, 2029—helping businesses reduce the cost of upfront expansion and improve cash flow. For added flexibility, businesses may also elect a reduced 40% bonus depreciation instead of full expensing, allowing deductions to be spread over time based on broader tax and cash‑flow planning goals.
How Will the Changes Impact Your Business?
Together, the Section 179 updates and the expanded 100% bonus depreciation offer valuable deductions to help businesses in nearly every industry accelerate tax deductions and support long-term growth. How will they fit into your business tax strategy going forward?
Industry-focused Benefits
Manufacturing and wholesale companies should pay close attention to the provisions, especially if they are planning to invest in new equipment or expand their facilities. Provided the property is eligible, the new 100% depreciation for QPP would allow them to write off the total cost immediately rather than adhering to a long-term depreciation schedule.
The new provisions also benefit large-scale agricultural and farming entities. The increased expense limit under Section 179, coupled with 100% bonus depreciation, can help them maximize tax savings by taking advantage of immediate write-offs on the purchase of machinery and equipment.
Private healthcare practices can also benefit from a combined strategy that utilizes both the Section 179 expense limit increase and 100% bonus depreciation to offset the cost of upgrading and replacing needed medical equipment and technology. Such tax incentives are the key to improvements in patient care and operational efficiency.
The construction industry is also poised to benefit from the new tax deduction provisions under OBBBA, with experts predicting a boost in industrial construction spending. Contractors planning to invest in machinery and equipment are now able to expense the full cost up front, which in turn reduces taxable income and frees up cash flow for business growth.
Businesses in many other industries will likely see tax benefits thanks to OBBBA. Examples include trucking and transportation companies with plans to replace their fleets, government entities planning equipment updates, and architectural and engineering firms looking to invest in new tools and technology for growth.
Planning for the Current Tax Season
How should you approach these new and expanded tax incentives when planning for the current tax season? Before claiming Section 179 or 100% bonus depreciation, work with your business tax advisor to fully assess your eligibility and determine both the short- and long-term benefits of each option.
Keep in mind that 100% bonus depreciation comes with fewer limitations than Section 179, especially for businesses structured as partnerships, LLCs, or S corporations. As such, your tax professional may recommend using bonus depreciation first (when possible) and reserving Section 179 for assets not eligible or to fill in remaining tax planning gaps.
Then again, because acquisition date is not a factor for a Section 179 expense, this option may be better for certain assets.
Navigate OBBBA Changes with Confidence
Enhanced deductions and expensing provisions under OBBBA provide relevant opportunities for business taxpayers to reduce their taxable income and accelerate growth. Understanding the changes to Section 179 and 100% bonus depreciation—and how those changes will impact your business and your industry—will be critical in 2026 and going forward.
With decades of experience in business tax planning and management, Landmark helps you successfully navigate emerging opportunities in the wake of OBBBA and build an effective tax strategy that meets the specific goals of your company. Contact us today to get started.
