Business & Finance Insights | Leasing & Financing

Tax-Efficient Capital Planning Under OBBBA

Tax-Efficient Capital Planning Under OBBBA

Navigating Section 179, Bonus Depreciation, and Equipment Investments

The One Big Beautiful Bill Act (OBBBA), passed in July 2025, has reset the landscape for capital planning. With the restoration of 100% bonus depreciation and higher Section 179 limits, financial executives have a renewed opportunity to use tax policy as a lever for liquidity and growth.

This article outlines how these provisions apply to equipment and technology investments and what they mean for capital planning strategies going forward.

What’s Changed & Why it Matters

OBBBA introduced several changes that directly impact capital expenditures:

100% Bonus Depreciation Restored: Qualified property acquired and placed in service after Jan. 19, 2025, is now eligible for immediate expensing, reversing the phasedown under the Tax Cuts and Jobs Act (TCJA).

Section 179 Expensing Increased: The deduction cap has increased to $2.5 million, with phase-outs beginning at $4 million. This is particularly useful for mid-sized acquisitions and certain property types not covered by bonus depreciation.

Interest Deduction Rules Shifted: Starting in 2025, interest expense limits under IRC §163(j) will again be calculated using EBITDA rather than EBIT. This change raises the cap on deductible interest, especially relevant for capital-intensive strategies.

Together, these provisions reduce the after-tax cost of equipment and technology purchases, helping improve ROI.

Implications for Equipment Investments

Liquidity vs. Longevity: Accelerated expensing provides near-term cash flow relief but reduces deductions available in later years. For organizations investing heavily in equipment, this tradeoff shapes long-term tax planning.
Timing of Projects: Bonus depreciation deductions can be taken in the year the equipment is placed in service, meaning project go-lives can accelerate or delay the pacing of tax benefits.
Control in Elections: Under OBBBA, organizations may elect out of bonus depreciation on an asset class basis or apply transitional rates to better align deductions with investment cycles. Section 179 offers added flexibility by allowing companies to expense specific assets individually—often used first before applying bonus depreciation more broadly.
Financing Structures: OBBBA’s tax incentives most directly apply to capital/finance leases. At the same time, structures such as Fair Market Value leases and as-a-service models offer strategic benefits like capital flexibility, potential balance sheet advantages, and deductible lease payments.
State Variability: Not all states conform to federal bonus depreciation rules. Conforming states provide both federal and state benefits, while non-conforming states may limit deductions— an important consideration for multi-state operations.

A Clearer Path for Capital Planning

By making 100% bonus depreciation permanent, OBBBA removes a major source of tax-related uncertainty in capital planning. While economic conditions will continue to evolve, this legislation provides a stable foundation for equipment and technology investments—helping organizations keep their capital working today while positioning for growth in the years ahead.

Interested in aligning your capital planning with today’s tax landscape? Connect with us today.

This has been prepared for informational purposes only and is subject to change at any time without notice. It is not intended to be used as tax, legal, or accounting advice. Consult with a tax, legal, or accounting professional for guidance.