Tax insight

The One Big Beautiful Bill Act permanently extends 100% bonus depreciation, introduces qualified production property

Insight
5 minute read
August 26, 2025

What happened?

The One Big Beautiful Bill Act (Act), enacted on July 4, 2025, permanently extends 100% bonus depreciation under Section 168(k) and introduces a new elective 100% depreciation allowance under Section 168(n) for qualified production property (QPP). 

See our Tax Insight, President Trump signs H.R. 1, the “One Big Beautiful Bill Act” for an overview of the tax provisions included in the Act and our Accounting for US reform In Depth for an overview of the financial reporting considerations. 

Why is it relevant?  

The Act’s permanent extension of 100% bonus depreciation can provide significant cash tax benefits for taxpayers across all industries. In addition, the elective 100% depreciation allowance for QPP offers an unprecedented opportunity to claim an immediate deduction for certain nonresidential real property that otherwise would be depreciated over 39 years. 

Action to consider

Notwithstanding the permanent extension of Section 168(k), the ability to claim a 100% depreciation deduction on nonresidential real property under Section 168(n) provides a unique opportunity to deduct the entire cost of QPP that could affect capital investment decisions, tax planning, and financial reporting of companies.

Assessing the effects of the immediate deductions under both provisions not only necessitates a review of current and planned capital expenditures but also an analysis of potential downstream effects, such as the corporate alternative minimum tax (CAMT), the base erosion and anti-abuse tax (BEAT), the foreign-derived deduction eligible income (FDDEI) deduction, state income tax, attribute usages, and other related tax considerations.

Taxpayers also may want to communicate with government officials from the IRS and Treasury regarding identified issues as guidance for the Act’s provisions begins to be developed. 