If you own a business, invest in equipment, or are planning a renovation or expansion, a potential tax change could significantly impact your bottom line.

During a recent policy speech, a proposal was introduced to reinstate 100% bonus depreciation, effective January 1, 2025. This change, if passed, would allow businesses to deduct the full cost of qualifying assets—such as vehicles, machinery, and equipment— in the year they are put into service.

What Is Bonus Depreciation and Why Does It Matter?

Bonus depreciation is an additional tax deduction businesses can take on certain assets in the year they are placed into use. Currently, this deduction is capped at 40% of the asset’s cost. In prior years, businesses could deduct 100%, leading to major tax savings and increased cash flow.

The latest proposal suggests bringing back full bonus depreciation, making it easier for businesses to reinvest and expand.

What Was Said & What to Expect

While the speech did not explicitly confirm that 100% would return, the general commitment to reinstating "bonus depreciation" suggests a strong possibility. Given that this measure previously had bipartisan support and that both the House and Senate are currently Republican-led, tax professionals anticipate a full reinstatement could be included in the next tax package.

Who Benefits the Most?

If passed, this tax incentive could significantly impact business owners and investors in the following ways:

✔ Companies Purchasing Equipment & Vehicles – Those investing in business assets may qualify for a much larger deduction.

✔ Real Estate Investors & Developers – Those considering cost segregation studies on rental properties or renovation projects could see major tax advantages.

✔ New & Expanding Businesses – Startups and companies making large upfront investments would have a stronger incentive to move forward with purchases.

How to Plan for 2025

While nothing is finalized yet, this potential change is something business owners should monitor closely. If you’re planning capital investments, 2025 could be an ideal year to take advantage of increased deductions.

As more details emerge, we’ll continue to provide updates. Have questions about how this could impact your tax strategy? Reach out today to start planning ahead!