The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, provides significant tax advantages for companies investing in capital assets and manufacturing facilities.

Companies can maximize their tax savings by using cost segregation studies alongside bonus depreciation. Cost segregation identifies assets that qualify for accelerated depreciation, increasing first-year deductions and deferring tax liability.

100% Bonus Depreciation Returns Permanently

Bonus depreciation is now permanently set at 100%, reversing the scheduled phase-down to 40% in 2025.

What qualifies:

• Equipment and machinery with depreciation periods of 20 years or less
• Interior building improvements (qualified improvement property)
• New and used property
• Assets acquired and placed in service after January 19, 2025

For manufacturing and R&D companies, eligible assets include production equipment, computers, machinery, research tools, and specialized laboratory equipment. Assets must be operational within the tax year to qualify.

100% Expensing Now Available for Manufacturing Buildings

Manufacturing and production buildings can now be fully expensed in the first year, a substantial change from the standard 39-year depreciation schedule.

Requirements for Qualified Production Property:

• Construction begins after January 19, 2025, and before January 1, 2029
• Building is operational before January 1, 2031
• Used for manufacturing, agricultural/chemical production, or refining
• Located in the United States or U.S. territories
• Portions used for offices, administration, lodging, parking, sales, research, or software development are not eligible for immediate expensing

Planning Your Investment Strategy

Companies planning significant facility investments should coordinate timing carefully to take full advantage of these provisions. Buildings with multiple uses will require cost segregation analysis to identify which areas qualify for immediate expensing versus standard depreciation.

To discuss how these tax law changes may impact your business, connect with our team at contactus@kbfadvisory.com.