The Return of 100% Bonus Depreciation (and more tax news)

The #1 question business owners have been asking me is finally answered: "When is bonus depreciation going back to 100%?"

The House Ways & Means Committee has released its amendments to the 'One Big Beautiful Bill', and bonus depreciation is back!

What do real estate investors & business owners need to know?

• 100% Bonus Depreciation through 2029 with No Phase-Down Period: The committee's amendments extend 100% immediate write-offs through the end of 2029 for eligible property—a massive win for real estate investors, manufacturers, and capital-intensive businesses.
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  Unlike the previous law, there's NO phase-down after 2029. Bonus depreciation will remain at 100% through 2029, then drop immediately to 0% in 2030 (2031 for certain long-production property).
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• R&D Expensing Returns: Domestic research expenses can once again be fully deducted (not amortized) through 2029. Beyond just allowing immediate expensing again, the bill includes specific improvements to the R&D tax credit, making it more accessible to small businesses with gross receipts under $5 million, who can use up to $250,000 of their R&D credit to offset payroll taxes.
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• Better Interest Deductions: Interest deductibility reverts to the more favorable EBITDA-based limitation from 2025-2029.
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• Enhanced QBI Deduction: The QBI deduction is getting boosted from 20% to 23% (not just 22% as initially reported) and made permanent—creating immediate increases in after-tax cash flow for pass-through business owners.
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• Increased Section 179 Expensing Limits: Section 179 allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year, rather than capitalizing these costs and depreciating them over several years. The bill dramatically increases deduction limits from $1M to $2.5M, with the phase-out threshold increased from $2.5M to $4M.
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• Opportunity Zones extended (2027-2033) with a focus on rural areas: The program gets a new round of designations with at least 33% of new zones required to be in rural areas. The legislation explicitly targets rural development and includes enhanced incentives for these investments while winding down the original zone designations.
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• Manufacturing Tax Rate Reduction: A special reduced corporate tax rate of 15-20% for qualified manufacturing businesses. The bill specifically defines "manufacturing taxpayer" as businesses deriving substantially all gross receipts from qualified products manufactured in a manner that results in substantial transformation of the property.

What else is in the bill?

• No Tax on Qualified Tips. A new tax deduction is created that makes cash tips completely tax-free for service workers in traditionally tip-receiving occupations (the Treasury to publish a qualifying list). This benefit is limited to non-highly compensated employees (those earning less than $150k).
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• No Tax on Car Loan Interest: The bill specifically allows deduction of qualified vehicle loan interest for tax years 2025-2028, with a cap of $10,k. The vehicle must have its final assembly in the United States, and the deduction phases out for taxpayers with incomes over $200k (MFJ).
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• Lifetime Gift Exemption to $15M: Permanently increases the estate and gift tax exemption to $15M, preventing the reduction to $7M that was set for January 2026. This provides significant estate planning certainty for high-net-worth individuals, allowing them to transfer more assets tax-free to heirs during their lifetime or at death.
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• Increased Child Tax Credit: The bill increases the Child Tax Credit from $2,000 to $2,500 per qualifying child for taxable years 2025-2028, with a further increase to a $2,000 base amount that will be adjusted for inflation after 2028.
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• Bonus Deduction for Seniors: The $4k deduction for seniors will be available as an additional standard deduction for taxpayers receiving Social Security benefits. This will make a significant portion of Social Security benefits tax-free for many retirees.
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• SALT Cap Remains With New Formula: The bill retains limitations on state and local tax deductions but replaces the flat $10,000 cap with a more complex formula-based approach. The new system includes special provisions for pass-through business owners while maintaining deduction restrictions, particularly for high-income taxpayers.
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• Green Energy Credits Phased Out: The bill accelerates the sunset dates for many renewable energy incentives, like energy efficient home improvement and new energy efficient home credits, that were part of previous legislation.
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• Termination of Personal Exemption Deductions: The bill makes permanent the suspension of personal exemptions that was temporarily implemented in the 2017 Tax Cuts and Jobs Act.
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• Continuing Lower Individual Income Tax Rates: The bill extends the lower individual income tax rates and brackets from the 2017 Tax Cuts and Jobs Act, which were scheduled to expire after 2025.

What does this mean for your planning?

1. Capital Investment Timing: If you've been delaying major equipment purchases or property improvements, the 100% bonus window through 2029 creates a predictable planning horizon.
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2. Entity Structure Review: With the enhanced QBI deduction and new service business provisions, now is the time to review whether your current business structure maximizes these benefits.
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3. Manufacturing Focus: The bill carries special benefits for manufacturing facilities, aligning with the administration's goal of revitalizing domestic production.

​Follow along for timely updates!

The July 4th target completion date suggests rapid movement ahead. We'll keep you updated as the bill moves through markup and to the House floor. The next 2-3 weeks will be critical for final provisions.

Take care,

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