Senate Bill Brings Back 100% Bonus Depreciation and This Time, It’s Permanent

The Senate has just unveiled its latest take on the "Big Beautiful Bill," and it’s loaded with some major tax benefits for business owners.

Here are the key points:

✅ 100% Bonus Depreciation Is Back... For Good

Unlike the House version, which starts to phase out bonus depreciation in 2029, the Senate's bill makes 100% bonus depreciation a permanent fixture for property that comes into service after January 19, 2025. This move secures one of the most effective tax strategies for real estate investors and business owners... forever, ever.

🧪 R&D Costs Fully Deductible Again

Starting from 2024, businesses can once again fully deduct their research and development expenses in the year they occur, putting an end to the five-year amortization rule established by the TCJA. This is a fantastic boost for companies that thrive on innovation!

📉 Business Interest Deduction Back to EBITDA

The new bill brings back the business interest deduction based on EBITDA rather than EBIT. This change opens the door for more generous deductions, which is particularly beneficial for companies that are heavily leveraged.

💼 QBI Deduction Made Permanent

Great news for small business owners! The 20% Qualified Business Income (QBI) deduction is here to stay and has officially become permanent.

There's more good news: the income threshold for wage limitations has increased from $50k/$100k to $75k/$150k for single and joint filers. This change means that even more small business owners can take advantage of the full deduction!

💵 New Individual Deductions (w/Caps & Sunset Dates)

Temporary but welcome deductions include:

• Tips: Up to $25,000 (through 2028)

• Overtime Pay: $12,500 single / $25,000 joint (through 2028)

• Auto Loan Interest: Up to $10,000 (through 2028)

These aren’t massive, but they offer relief at the margins.

🚫 SALT Cap Stays and Gets Tighter

Bad news for high earners:

• The $10,000 SALT deduction cap remains.

• Pass-through entity (PTE) tax workaround limits are tightened: now capped at the greater of $40,000 or 50% of PTE taxes paid, dampening popular state-level strategies to bypass the SALT cap.

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What This Senate Bill Means

The Senate is clearly showing its commitment to long-term pro-business tax measures, such as bonus depreciation and Qualified Business Income (QBI), while also tightening the screws on SALT cap workarounds that mainly benefit high-income earners.

However, the bill still needs to be aligned with the House version, so brace yourself for more discussions, especially regarding SALT. If it gets through, this could significantly change tax planning for years ahead.

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✌️ out. -Rick