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July 22.2025

2 Minutes Read

What You Need to Know About Deducting Equipment and Property Purchases

Name: Copley Media Group
Address: 263 Huntington Avenue, Boston, Massachusetts, 02115
Telephone: 6178172012

Illustration of deducting equipment purchases with graphs and calculator.

Unpacking Major Tax Deductions for Equipment Purchases

The recently enacted One Big Beautiful Bill Act (OBBBA) heralds a significant shift in how businesses can manage their tax obligations associated with purchasing equipment and constructing properties. Primarily aimed at invigorating business investment, the act enhances tax breaks substantially, allowing businesses an opportunity to harness deductions that not only improve cash flow but also lower overall tax liabilities.

Understanding Bonus Depreciation Changes

One of the biggest highlights of the OBBBA is the reinstatement of a 100% bonus depreciation rate for qualified property. Previously, this rate has been declining since 2023, yet a stroke of legislative luck sees it returning for acquisitions made on or after January 19, 2025. This allows businesses to recapture considerable expenses in just one tax year, giving them more room to grow. However, businesses need to navigate specific regulations carefully; properties placed in service before that date will only qualify for a 40% deduction, thus emphasizing the urgency in making business decisions.

First-Year Expensing: A Game Changer for Cash Flow

Equally beneficial, the Section 179 deduction, often referred to as first-year expensing, allows for a hefty write-off. Instead of spreading the costs over several years, businesses can fully deduct the cost of qualifying assets in the year they are put into service. Notably, this new law doubles the deduction limit from $1.25 million to an impressive $2.5 million for 2025, with a phase-out threshold moving from $3.13 million to $4 million. These adjustments ensure that firms can claim deductions up to $6.5 million, which could translate to significant savings for medium to large enterprises.

Accelerated Benefits for Production Activity Facilities

Furthermore, businesses venturing into qualified production activities will benefit from a 100% depreciation provision for non-residential structures used in manufacturing, refining, or agricultural production. This immediate write-off applies to any qualifying structure placed into service before January 1, 2031, paving the way for increased investment in production facilities without the lengthy depreciation timelines traditionally associated with property expenses.

Final Thoughts

The advantages outlined by the OBBBA signal a golden opportunity for companies to streamline their investments while minimizing tax burdens. Businesses looking to optimize their financial strategies should consult with tax professionals to navigate these changes effectively and capitalize on every available deduction.

Tax Strategies & Accounting

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What You Need to Know About Deducting Equipment and Property Purchases

Unpacking Major Tax Deductions for Equipment Purchases

Understanding Bonus Depreciation Changes

First-Year Expensing: A Game Changer for Cash Flow

Accelerated Benefits for Production Activity Facilities

Final Thoughts

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