Year-End 2025: 100% Bonus Depreciation Is Back — A Houston SMB Playbook
Houston owners, this one’s big. The One Big Beautiful Bill Act (H.R.1, 2025) permanently restored 100% bonus depreciation for qualified property that’s acquired and placed in service on or after January 20, 2025 (i.e., after Jan. 19). Assets tied to a binding contract dated on/before Jan. 19, 2025 generally remain under the phase-down (40% for 2025). Plan purchases and install dates accordingly. (Congress.gov, Plante Moran, Grant Thornton)
What qualifies (and what’s new)?
Qualified property generally includes tangible personal property with a recovery period of 20 years or less—think machinery, equipment, computers, furniture, certain software, and qualified improvement property (QIP). Used property can qualify if long-standing requirements are met (e.g., not acquired from a related party). (RSM US, IRS)
Transitional rule: For 2025, property acquired under a binding contract on or before Jan. 19, 2025 but placed in service later in the year typically gets 40%, not 100%. Document your acquisition and “placed-in-service” dates. (Plante Moran)
Bonus idea for manufacturers: A new incentive allows 100% expensing for certain qualified production property tied to U.S. manufacturing facilities on specific timelines—powerful for Gulf-Coast industrial projects. (Baker McKenzie InsightPlus)
Section 179 vs. 100% Bonus: which first?
Section 179 (expensing): After OBBB, the limit is $2.5 million with a phase-out starting at $4 million (subject to inflation). It can apply to property placed in service in tax years beginning after Dec. 31, 2024. (Arnold & Porter, Plante Moran)
Bonus depreciation: 100% write-off with no taxable-income cap, but only for property acquired and placed in service on/after Jan. 20, 2025. (Plante Moran)
Typical flow: Elect Section 179 first, then apply bonus depreciation to the remaining basis. This combo often produces a full first-year write-off on equipment. (Mind eligibility and business-use tests.)
Vehicles: Houston-specific watch-outs
Passenger automobiles (under ~6,000 lbs. GVWR) are capped by IRC §280F luxury auto limits. For 2025, the first-year cap with bonus is $20,200; without bonus, $12,200. Subsequent-year caps also apply. (Journal of Accountancy, KPMG)
Heavy SUVs (over 6,000 lbs. and under 14,000 lbs. GVWR):
Section 179 has a special SUV cap of $31,300 for 2025. (IRS)
Bonus depreciation can generally cover 100% of the remaining basis (after any §179), subject to business-use rules and related limitations. (Document GVWR and >50% business use.) (RSM US)
Pro tip: Pickups with a bed ≥ 6 feet and many cargo vans are often treated more favorably than SUVs under §179; verify specs before you buy.
Texas angle: Federal vs. Texas Franchise Tax
Texas doesn’t mirror every federal rule inside the Franchise Tax (margin) calculation:
For COGS under the Franchise Tax, bonus depreciation is not allowed (fixed conformity to pre-2008 federal rules).
Section 179 in Texas COGS uses a 2007-era cap framework—much lower than today’s federal limits. Plan on federal savings that may not carry through to your Texas Franchise Tax computation. (Texas Comptroller, Legal Information Institute)
Five moves to make before December 31, 2025
Timeline audit: For each planned asset, confirm both dates:
Acquired (binding contract date) and
Placed in service (ready/available for use). Aim for on/after Jan. 20, 2025 to capture 100%. (Plante Moran)
Prioritize the right property: Focus on machinery, technology, vehicles, and QIP with clear business impact; confirm used-property eligibility. (IRS)
Model §179 vs. Bonus: Run a side-by-side comparing cash taxes, NOLs, and pass-through effects. (Remember the SUV §179 cap and auto caps.) (IRS, Journal of Accountancy)
Consider cost segregation: If you recently bought/renovated a building, a cost-seg study may reclassify components to 20-year-or-less property that qualifies for bonus. (Plante Moran)
Coordinate financing & covenants: Immediate expensing can swing EBITDA and debt ratios. Align with lenders and your year-end close plan.
Quick scenarios
$250,000 CNC machine (new or used), acquired & placed in service Nov 2025 → Potential 100% deduction via bonus, subject to rules. (RSM US)
$78,000 heavy SUV (7,000 lbs. GVWR) at >50% business use → Up to $31,300 §179 + bonus on the remainder, often creating a full write-off year one. Track mileage and business-use logs. (IRS)
Passenger car used 80% for business → First-year depreciation capped by §280F; don’t over-assume a full write-off. (Journal of Accountancy)
How SAS Tax & Business helps (Houston + Greater Texas)
We’ll build your CapEx + tax model and map the binding-contract and in-service dates to the new rules.
We’ll optimize §179 vs. 100% bonus, vehicle strategies, and Texas Franchise Tax implications, then implement clean documentation.
As a BBB-accredited firm, we operate with strict confidentiality and never sell your data.
Final word
This is a rare, Houston-sized opportunity to refresh equipment, upgrade fleets, and improve cash flow—if you execute the dates and documentation precisely.
Ready to run the numbers? Call (832) 263-7308 or email [email protected] to schedule a consultation at 5700 NW Central Dr, Unit 110, Houston, TX 77092.
