Bonus Depreciation Comeback: Your Strategic Advantage in the New Tax Landscape
- Rick Ruberg
- 3 days ago
- 3 min read
A significant new tax bill is currently making its way through Congress. Initially anticipated by Memorial Day, the timeline has now shifted to July 4, 2025 due to some delays. The momentum is definitely building, even amidst the usual political gridlock.
Known as the "One Big Beautiful Bill," this legislation presents a fantastic opportunity for business owners and investors: the return of 100% bonus depreciation. If it gets the green light, it would enable immediate write-offs for qualifying property purchases over the next four years, offering substantial tax savings and enhancing cash flow.
Now is the perfect time to get ready. Grasping how bonus depreciation works (and how it fits into your overall tax strategy) can empower you to act quickly and stay ahead once the bill is officially passed.
What's in the Big Beautiful Bill?
100% Bonus Depreciation Returns
The bill would restore full bonus depreciation for the next four years, with ongoing discussions about potentially making this provision permanent. This represents a significant opportunity for real estate investors and business owners to accelerate deductions and substantially reduce taxable income.
Accelerated Depreciation for Manufacturing
New provisions may allow factories and industrial buildings—typically depreciated over 39 years—to be fully expensed much more rapidly. This could be a game-changing tool for American manufacturers looking to expand or upgrade facilities.
Tax Exemptions on Tips, Overtime, and Social Security
A four-year federal tax exemption is being considered for tip income, overtime pay, and Social Security benefits. This would be particularly impactful for service-based industries and their employees, potentially putting more money directly in workers' pockets.
Corporate Tax Cuts
The bill proposes a potential reduction from 21% to 15% for companies that manufacture in the United States—a measure designed to encourage domestic production and onshore growth.
Auto Loan Interest Deduction
A new deduction for interest paid on loans for U.S.-manufactured vehicles is under consideration, likely structured as an itemized write-off for taxpayers.
Permanent Extension of 2017 Tax Cuts
The proposal includes preserving the larger standard deduction, enhanced child tax credit, and lower personal tax brackets that were introduced in the Tax Cuts and Jobs Act of 2017.
How They're Planning to Fund These Changes
Repeal or scaling back of Inflation Reduction Act (IRA) tax credits
Increased taxes on university endowments
Elimination of tax breaks for hedge fund managers and sports team owners
The Congressional Path Forward
Vote Requirements
While a simple majority is usually enough to get legislation passed, lawmakers often strive for two-thirds support. This extra backing helps ensure success, speeds up the process through various procedural challenges, sidesteps potential vetoes, and keeps budget-conscious folks happy about the financial implications.
Timeline Expectations
The House Ways and Means Committee is set to review the bill on May 12th, with a finalized draft anticipated soon after. Although the current goal is to have everything wrapped up by July 4th, crafting a single, cohesive bill that garners widespread support while also tackling budget issues will require a lot of negotiation.
Most experts believe that the bill will likely pass in the Spring or Summer of 2025, as legislative progress tends to slow down as Congress approaches election season, making it tougher to reach significant bipartisan agreements.
Tax professionals will keep you updated in real-time as changes are made official, helping clients adjust their strategies to seize new savings opportunities.
Why Preparation Matters Now
If/when passed, this bill is going to spark a need for updated tax strategies, cost segregation studies, and revamped deductions in various industries. While many businesses and individuals will wait until after it’s passed to react, those who get ready now will be in a great position to reap the benefits right from the start when it’s implemented.
Note: This information is based on proposed legislation that remains subject to change. Consult with a qualified tax professional before making decisions based on pending tax law changes.
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