Tax Planning
Tax Planning in the Era of the One, Big, Beautiful Bill (OBBBA): Harnessing New Depreciation Provisions
Permanent 100% bonus depreciation under the OBBBA opens doors for savvy depreciation strategies—this article guides businesses to align their asset purchases and accounting practices for maximum benefit.
By NomadicTax Research Team • 5-8 min read • July 19, 2026
## What Changed Under OBBBA’s Depreciation Rules
Under the One, Big, Beautiful Bill (enacted July 4, 2025), **Section 168(k)** of the Internal Revenue Code was amended to allow a **permanent 100% additional first-year depreciation deduction** for qualified property placed in service after **January 19, 2025**.([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai)) That means businesses can immediately expense the full cost of qualifying assets instead of depreciating them over several years.
Proposed regulations to implement these changes are in progress, including rules clarifying which items qualify and how elections under §168(k)(5), §168(k)(10), and qualified sound recording productions will be treated.([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai))
## Strategic Opportunities for Businesses
Here are actionable strategies for businesses to optimize tax outcomes under the new regime:
- **Time purchases deliberately:** Buying and placing assets in service *after* January 19, 2025 locks in eligibility for full expensing.
- **Classify assets accurately:** Land improvements, machinery, equipment, and certain creative productions may qualify if they fall within the IRS’s definitions of “qualified property.”
- **Make required elections:** For special categories like §(k)(5) or (k)(10) property, businesses need to make elections to claim full or partial bonus depreciation. Failing to elect when needed may result in less beneficial depreciation.
## Examples in Action
- A manufacturer purchases $500,000 worth of new machinery in mid-2025. Under the new rules, they can deduct the *entire* amount in 2025 rather than over several years—freeing up cash flow and reducing taxable income significantly.
- An audio production company begins recording a “sound recording production” with costs incurred after the effective date—those costs become eligible for treatment as qualified property.([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai))
- For smaller assets that might have previously required depreciating over 5 or 7 years, such as computer equipment or furniture bought after Jan 19, 2025, the business can fully expense them in the first year.
## Important Compliance Considerations
- **Document qualifying timelines:** Maintain records showing the acquisition and “placed-in-service” dates clearly, since assets placed in service *after* the date are key.
- **Monitor proposed regulations:** While interim guidance exists, some details like applicable percentages for certain classes are pending. Businesses should monitor IRS final regulations as they are issued.([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai))
- **Beware of mixing classifications:** Some assets may straddle categories—ensure correct classification to avoid losing eligible benefit.
## Bottom Line
The OBBBA’s depreciation changes represent one of the most impactful recent federal tax planning opportunities. Businesses that align their asset acquisition and accounting practices to these rules could see substantial savings—especially if they act now and carefully manage filing requirements. The key is timing, classification, and staying plugged into evolving IRS guidance.