OBBBA expands expensing: Section 179 raised, bonus depreciation and a new Qualified Production Property election

Richard Furlong outlined a package of expensing and depreciation changes that will affect many businesses’ capital‑investment decisions.

He said Section 179's maximum expensing limitation is increased retroactively for tax year 2025 to $2.5 million (investment phase‑out threshold raised to $4 million) and that the amounts will be inflation adjusted for years after 2025. "These increases to 179 are permanent," he said, noting an SUV exception remains in force.

Furlong also described the reinstatement and expansion of bonus depreciation under IRC §168(k). Qualified property acquired and placed in service after Jan. 19, 2025, may be eligible for 100% bonus depreciation, including certain specified agricultural plants and certain used property that meets the statutory acquisition conditions.

A new elective special depreciation allowance for Qualified Production Property was added as IRC §168(n). Furlong explained QPP is nonresidential real property directly used as an integral part of manufacturing, chemical production, agricultural production, or refining that results in a substantial transformation of tangible personal property. Taxpayers may elect the special allowance for QPP placed in service after July 4, 2025, generally through Dec. 31, 2030 (with disaster extensions in limited cases).

Panelists in the Q&A discussed technical implementation questions, including cost segregation use to identify shorter‑lived components and how expansions of existing facilities may qualify if statutory requirements and construction/start dates are met.

Practitioners should review Publication 946 and IRS notices cited by the panel and consider elections carefully because some elections (for example, electing out of bonus depreciation for a class of assets) are generally irrevocable without IRS consent.