News

Key takeaways

• The One, Big, Beautiful Bill (signed July 4, 2025) includes major, immediate changes affecting business expensing and depreciation for property placed in service in 2025. (IRS)
• Section 179 expensing was expanded under the law — the maximum immediate deduction was raised to $2.5 million with a higher phase-out threshold (applies to property placed in service in taxable years beginning after 12/31/2024). That means many small/medium manufacturers can expense large equipment purchases right away instead of capitalizing and depreciating over years. 
• 100% bonus depreciation (first-year full expensing for qualifying assets) was restored/expanded in the bill for qualifying property placed in service after January 19, 2025 — this can be used in combination with Section 179 in certain situations (but rules and limits differ by asset). 
• Vehicle rules matter: heavy vehicles (generally GVWR > 6,000 lbs) commonly used in manufacturing (some pickups, vans, SUVs, box trucks) often avoid the passenger-auto “luxury auto” dollar caps and may be fully expensed under Section 179 (subject to the SUV/Section-179 special caps and business-use rules). Passenger cars and smaller trucks remain subject to annual caps. Keep business-use documentation (≥50% business use typically required). 

Practical examples (for WPMA members)

These examples assume the equipment/vehicle is placed in service in 2025 and the taxpayer otherwise qualifies (business use, taxable income limitation, etc.). Always confirm with your tax advisor before filing.

1. New CNC router, $300,000
• Scenario: manufacturer buys a new CNC router for $300,000, used 100% for business, placed in service in 2025.
• Result: Under Section 179 (limit now $2.5M), you can elect to expense the entire $300,000 in 2025, reducing 2025 taxable income immediately — or you could take 100% bonus depreciation instead if that gives better planning results. 
2. Forklifts and shop lifts, combined $450,000
• Scenario: three forklifts + two lifts purchased and placed in service in 2025, total cost $450,000.
• Result: These are qualifying equipment — you could expense the full $450,000 in 2025 under Section 179 (subject to overall limits and business income tests), freeing up cash flow and simplifying 2025 bookkeeping. 
3. Heavy pickup (GVWR > 6,000 lbs), $80,000
• Scenario: buying a heavy pickup or utility van used predominantly for deliveries/field service with GVWR > 6,000 lbs, cost $80,000, >50% business use.
• Result: Often eligible for full Section 179 expensing (or 100% bonus depreciation), allowing you to expense most or all of the $80,000 in 2025. Note there are special SUV/Section-179 dollar caps to watch for (e.g., certain SUVs have a lower Section-179 ceiling like the special $31,300 figure referenced for some SUV types in 2025); confirm the specific vehicle’s rules and GVWR. 
4. Passenger car (sedan) for sales rep, $40,000
• Scenario: $40,000 sedan primarily used by a sales rep (≥50% business use).
• Result: Passenger cars remain subject to the IRS “luxury auto” depreciation caps — you cannot necessarily expense the full $40k in year one. Instead, you’ll be limited by annual dollar caps on depreciation/Section 179 for passenger autos. Plan accordingly and talk with your CPA. 
5. Large used production equipment $1.8 million
• Scenario: A mill buys used production equipment for $1.8M in 2025.
• Result: The $2.5M Section 179 limit means you could potentially expense the entire $1.8M in 2025 (subject to the $4M phase-out threshold for total purchases and the business income limitation). Additionally, because bonus depreciation rules changed for property placed in service after 1/19/2025, used property may also qualify in some cases — another reason to check specifics with your tax advisor. 

Important constraints & action items

• Business-use percentage: Section 179 generally requires >50% business use for vehicles; accurate logs/records are critical. 
• Phase-outs and taxable income limits: the Section 179 deduction phases out dollar-for-dollar at higher purchase amounts and can’t exceed taxable income from the active trade or business (carryforward rules may apply). Check phase-out thresholds for 2025. 
• Vehicle GVWR and SUV caps: confirm each vehicle’s GVWR and whether it’s treated as a “heavy vehicle” (often >6,000 lb GVWR) — that can make a huge difference in first-year expensing. Some SUVs still have a special Section 179 cap (amounts vary by year). 
• Placed-in-service date matters: the OBBB provisions apply to property placed in service in taxable years beginning after 12/31/2024 (so purchases placed in service during 2025 are affected). Document the placed-in-service date carefully. 

Bottom line recommendation for WPMA members

1. If you purchased (or plan to purchase) machinery, equipment, or heavy vehicles in 2025, run the numbers now — Section 179 and the return of 100% bonus depreciation can create big tax savings and improve cash flow for reinvestment. 
2. Keep thorough records: purchase invoices, placed-in-service dates, and business-use logs for vehicles.
3. Talk with your tax advisor before filing — the interaction between Section 179, bonus depreciation, passenger auto caps, and taxable-income limits can be complex and is highly fact specific. Use the IRS OBBB guidance and the detailed FAQs as a starting point. (IRS)