When Congress passed the 2017 Tax Cuts and Jobs Act, it introduced a generous bonus: businesses could deduct 100% of the cost of eligible equipment in the year they bought it. No spreading it over five or seven years. Full deduction, year one.
That provision had a built-in expiration clock. The 100% deduction was only for 2017 through 2022. Then it dropped 20 points per year: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and zero in 2027.
If you bought a $50,000 piece of equipment this year and planned around the old law, you were looking at a $10,000 first-year deduction.
Then came the One Big Beautiful Bill.
What Changed on July 4, 2025
The One Big Beautiful Bill Act (OBBB) was signed into law on Independence Day 2025. It reversed the entire phase-down schedule permanently.
The IRS issued formal guidance on January 14, 2026, via Notice 2026-11, confirming: for qualifying property acquired after January 19, 2025, the additional first-year depreciation deduction is permanently restored to 100%.
That $50,000 piece of equipment? The full $50,000 is now deductible in the year you put it to use - for 2025, 2026, and every year going forward with no legislative renewal required.
The IRS guidance is at irs.gov/newsroom/IR-2026-06.
What Else the OBBB Changed for Small Businesses
Bonus depreciation was the headline change, but three other provisions matter if you're a small business owner filing taxes for 2026.
The QBI Deduction Is Now Permanent
The 20% Qualified Business Income (QBI) deduction under Section 199A was one of the biggest tax benefits in the 2017 law. Sole proprietors, S-corp owners, and partners in pass-through businesses could deduct 20% of their net business income before calculating taxes owed.
It was set to expire after December 31, 2025. Without action, it would have been gone for tax year 2026.
The OBBB made it permanent. If you file as a pass-through business - which most small businesses do - you still have that deduction. Nothing changes on your end, but it's worth knowing it's no longer at risk of disappearing.
Section 179 Got a Bigger Cap and Inflation Indexing
Section 179 lets businesses deduct the full cost of equipment in the year of purchase, similar to bonus depreciation but with slightly different rules. For 2026, the Section 179 cap is $2.56 million, meaning you can expense up to that amount in qualifying assets in a single year.
More importantly, the OBBB permanently indexed the Section 179 limit to inflation. Previously, Congress had to manually adjust the cap through legislation. It will now adjust automatically each year, which removes the uncertainty that's caused planning headaches for businesses making large asset purchases.
The phase-out starts at $4.09 million in total property placed in service during the year.
The Business Interest Deduction Reverted to the More Favorable Calculation
If your business carries debt, you may be aware of the 163(j) limitation on business interest deductions. Under the original TCJA, the limit was calculated using EBITDA (earnings before interest, taxes, depreciation, and amortization), which is more generous. The TCJA had that switch to EBIT - without the depreciation add-back - after 2021, which meant higher taxable income for capital-intensive businesses.
The OBBB restored the EBITDA-based calculation. For businesses carrying significant debt on equipment or real estate, this can meaningfully reduce the amount of interest expense that gets disallowed.
Why This Matters in June Specifically
Q2 estimated tax payments are due June 15, 2026.
If you bought equipment since January and haven't factored bonus depreciation into your estimated payments, you may be overpaying your Q2 estimate. Your accountant or tax software should already be accounting for this, but if you're calculating estimated payments manually - or haven't updated your assumptions since last year - it's worth revisiting now.
The math is simple: a $30,000 equipment purchase deducted at 100% instead of 20% creates an $8,000 difference in deductible expense. At a combined 25% effective rate, that's $2,000 less owed in taxes.
That's not a rounding error for a small business.
A Note on Timing
The bonus depreciation applies to property "acquired and placed in service" after January 19, 2025. If you purchased equipment in late 2024 and it wasn't placed in service until 2025, the OBBB rules apply. If you're still evaluating a large equipment purchase for later in 2026, this should factor into your buying timeline and financing decisions.
There is an election available if you'd prefer not to take 100% in year one. Taxpayers may elect to deduct 40% instead (or 60% for certain long-production-period property). This might be useful if you want to spread deductions across years or anticipate higher income - and higher tax rates - in future years.
What to Do Now
Three steps worth taking this week:
1. Pull your 2025 and 2026 equipment purchase records. If you bought qualifying assets since January 19, 2025, confirm your tax filings (or estimated payment calculations) reflect 100% bonus depreciation, not 20%.
2. Talk to your accountant before June 15. If your Q2 estimate is due in two weeks and your bonus depreciation wasn't factored in, there's still time to adjust.
3. Revisit the Section 179 vs. bonus depreciation choice. Both let you deduct the full cost of equipment in year one. The differences matter for state taxes (some states don't conform to federal bonus depreciation rules), so confirm which method your state follows before deciding.
For the complete list of OBBB tax provisions, the IRS maintains a summary page at irs.gov/newsroom/one-big-beautiful-bill-provisions.
The Bottom Line
The tax bill signed last July quietly reversed one of the most significant phase-outs in the 2017 tax law. Bonus depreciation is back at 100%, permanently. The QBI deduction isn't going anywhere. Section 179 now adjusts with inflation.
Most small business owners know something big passed. Fewer have actually sat down to verify what it means for their specific situation. With Q2 estimated payments due in two weeks, this is the right time to check.
Sources: IRS Notice 2026-11 - bonus depreciation guidance (IR-2026-06) - IRS OBBB provisions overview - ClearValue Lending: OBBB small business tax analysis - Thomson Reuters: Section 199A QBI deduction
Priya Kapoor covers finance, numbers, and data for The Useful Daily.