On July 4, 2025, President Trump signed the 2025 tax reform into law as H.R. 1, Republicans’ “One Big Beautiful Bill.” Among its most impactful provisions is the permanent restoration of 100% bonus depreciation, offering long-term clarity for tax planning and capital investment strategies.
For a comprehensive overview of all tax provisions in the 2025 Final Budget Reconciliation Bill, refer to this in-depth article.
Prepare for tax policy changes and join Cherry Bekaert for the Tax Horizons: Planning Ahead After the Reconciliation Bill CPE-eligible webinar series to gain insights and actionable strategies from industry professionals.
Key Takeaway
H.R. 1, largely shaped by the Senate’s permanence provisions for bonus depreciation, is a major victory for taxpayers planning large capital projects or real estate investments. By stabilizing 100% bonus depreciation, increasing Section 179 thresholds, adding a full deduction for certain commercial properties, and setting a clear timeline for the end of Section 179D, it dramatically reshapes tax strategy for 2025 and beyond.
For detailed information on the repeal and transition rules for Section 179D, please refer to our dedicated article.
Trump Tax Bill Bonus Depreciation Changes
The Senate version of the bill, which was ultimately passed by the House and signed by the president, signifies a pivotal change: making permanent the 100% bonus depreciation provisions for qualified property placed in service after January 19, 2025, effectively removing the phase-down that was previously scheduled under the Tax Cuts and Jobs Act (TCJA) of 2017.
Under the original TCJA, bonus depreciation was set at 100% through 2022, then scheduled to decrease by 20% each year. By 2025, businesses faced only a 40% write-off in the first year, with a complete phase-out on the horizon. The Senate-driven provision in the bill reversed that decline, restoring the full incentive indefinitely.
Impact on Cost Segregation Studies
A cost segregation study is a tax strategy that allows taxpayers to accelerate depreciation deductions on real estate investments. The study dissects a building’s cost into components that can be depreciated over shorter recovery periods (typically five, seven or 15 years) instead of the standard 27.5- or 39-year periods. This shifts more of the investment into categories eligible for accelerated depreciation, increasing early-year tax deductions and improving cash flow.
Why a Cost Segregation Study Is Now More Valuable
With the bill’s permanent 100% bonus depreciation, every dollar reclassified into short-life modified accelerated cost recovery systems (MACRS) property through a cost segregation study can be fully deducted in the first year. This creates large upfront deductions that were previously at risk of being diminished under the old law.
Example:
A $4 million warehouse purchase in 2025 might, through a cost segregation study, allocate $800,000 to five- and 15-year property. Under the old scheduled phase-down, $411,000 of the five- and 15-year property (at a 40% rate) would have been deductible in the first year. Now, as a result of the change, the entire $800,000 can be written off immediately.
Enhanced IRC Section 179 Expensing
H.R. 1 also raised the IRC Section 179 (Section 179) cap to $2.5 million, allowing businesses to immediately expense more qualifying property. This is particularly useful for smaller investments, personal property additions and equipment purchases.
When paired with cost segregation and bonus depreciation, Section 179 can apply to smaller asset purchases (up to its limit) while cost segregation unlocks larger deductions by accelerating structural component depreciation that qualifies for 100% bonus treatment.
New 100% Depreciation for Certain Qualified Production Property
Another standout feature of the tax reform is the new 100% first-year depreciation allowance for certain commercial real property used in qualified production activities. Qualified production property (QPP) is defined as the portion of nonresidential real property used by the taxpayer as an integral part of a qualified production activity.
In alignment with the broader objective of reshoring production to the United States, QPP must meet several criteria, including:
- It must be placed in service within the United States
- Have its original use commence with the taxpayer
- Begin construction after January 19, 2025, reach completion before the end of 2030, and
- Be placed in service no later than 2031
This provision is expected to significantly benefit manufacturing and production businesses that are planning to construct or upgrade facilities for domestic production in the United States by allowing the taxpayer to deduct the entire building cost in year one.
While this provision offers substantial benefits, it is narrowly tailored — only taxpayers meeting all the qualified production activity criteria will be eligible. Examples of potentially eligible businesses include those involved in producing goods, operating industrial plants, or manufacturing components and finished products. Careful evaluation of project scope, timing and use is essential to determine qualification for this powerful first-year deduction.
Example:
A company constructing a $20 million facility for advanced manufacturing can now immediately write off the full cost if it meets the qualified production definitions, improving project ROI and freeing capital for additional investments.
Tax Planning Implications for 2025 and Beyond
Planning will be critical as the 2025 tax reform creates a powerful new landscape for real estate owners and businesses:
- Permanent 100% bonus depreciation means no more tax uncertainty or racing deadlines.
- Section 179’s higher cap helps maximize write-offs for smaller personal property investments.
- Cost segregation studies become even more compelling, as most reclassified building components can be fully deducted upfront.
- The new 100% allowance for production real property opens the door for enormous first-year deductions on manufacturing-heavy projects.
Next Steps To Guide You Forward
To make the most of the 2025 tax reform provisions, businesses should begin planning now to align with key deadlines and maximize available incentives:
- Consider cost segregation studies early, since under the new law, every dollar of short-lived property potentially qualifies for an immediate write-off.
- Take advantage of the new production property rules if investing in manufacturing-related facilities.
To navigate these changes with confidence and determine a strategy that is optimized for both compliance and cash flow, engage Cherry Bekaert’s Tax Credits & Incentives Advisory (TCIA) professionals. Their deep industry experience can help you identify eligible opportunities, model tax impacts and implement a forward-looking plan tailored to your firm’s goals.
Upcoming Webinars
Please join Cherry Bekaert for our webinar series, Tax Horizons: Planning Ahead After the Reconciliation Bill, where we will explore the reconciliation bill in more detail and bring you insights that will help you adjust to changes in the tax landscape.
Sessions:
- Aug. 13: Your Financial Legacy: Key Individual and Estate Tax Shifts
- Aug. 27: Business Tax in Motion: Corporate and PTE Developments
- Sept. 10: New Global Playbook: International Game Changers
- Sept. 24: From Capitol to County: State & Local Tax in Focus
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