Good news for small business owners! The One Big Beautiful Bill Act (OBBBA) has made it much easier and more profitable to write off your business equipment and property purchases. These changes could put thousands of dollars back in your pocket. Here’s what your Padgett team wants you to know about these opportunities.
The Big Win: 100% Bonus Depreciation is Back
Here’s the headline: Starting January 20, 2025, you can now write off 100% of eligible business purchases in the first year again. This is huge!
Let’s say you bought a $50,000 piece of equipment for your business. Under the old rules that were in effect for 2024, you could only deduct 60% ($30,000) in the first year. Now, you can deduct the full $50,000 immediately.
What qualifies? Most business equipment you’d typically buy:
- Machinery and equipment
- Computers, printers, and tech gear
- Business software
- Company vehicles
- Interior improvements to your business space (like new flooring, lighting, or updating your workspace)
What doesn’t qualify? Building expansions, elevators, or major structural changes to buildings. Those still need to be written off over 39 years.
Your Padgett advisor can review your recent and planned purchases to make sure you’re capturing every eligible deduction.
Even Better Section 179 Limits
The law also doubled the amount you can immediately write off under Section 179 rules – from $1.25 million to $2.5 million for 2025. For most small businesses, this means you can write off virtually any equipment purchase right away.
The phase-out threshold also increased from $3.13 million to $4 million. This means even if you’re making substantial equipment investments, you’re less likely to lose these benefits.
Special rules for business vehicles: If you buy a heavy SUV (between 6,001 and 14,000 pounds) for business use, there’s a cap of $31,300 for the immediate write-off.
Padgett Strategy Tip: While both bonus depreciation and Section 179 can give you immediate write-offs, the rules get tricky depending on how your business is structured (LLC, S-Corp, partnership). Your Padgett advisor will typically recommend using bonus depreciation first because it has fewer restrictions and complications.
Manufacturing Businesses Get a Special Bonus
If you’re in manufacturing, production, or refining, there’s an extra benefit. You can now write off 100% of qualifying production buildings in the first year, instead of spreading it over 39 years.
Here’s what qualifies:
- Buildings used directly for manufacturing, production, or refining
- Construction must start after January 19, 2025, and before 2029
- Building must be operational before 2031
What doesn’t qualify: Office space, sales areas, parking, or research facilities within the building.
This could represent massive tax savings for manufacturers planning new facilities or major expansions.
Real-World Examples of Your Savings
Let’s put this in perspective with some examples:
Restaurant Owner: You spend $75,000 on new kitchen equipment and dining room renovations. Under the old rules, you might have only been able to deduct $45,000 in year one. Now you can deduct the full $75,000 immediately.
Contractor: You buy a $40,000 work truck and $25,000 in tools and equipment. That’s $65,000 you can write off immediately instead of spreading over multiple years.
Manufacturing Business: You build a $500,000 production facility. Instead of writing it off over 39 years (~$12,800 annually), you can potentially deduct the entire amount in year one.
Don’t Leave Money on the Table – Partner with Padgett
These new rules are complex, and the savings opportunities are significant. Missing out on these deductions could cost you thousands in unnecessary taxes.
Your Padgett advisors are already up to speed on these changes and can help you:
- Identify which of your purchases qualify for immediate write-offs
- Plan future equipment purchases to maximize tax benefits
- Navigate the technical rules based on your business structure
- Ensure you’re not missing any eligible deductions
You don’t have to figure this out on your own. Contact your Padgett team today to schedule a review of your business purchases and make sure you’re taking advantage of every tax break available to you.