Like most construction businesses, yours probably invests in physical assets regularly. These may include equipment, vehicles, and computing devices and software. If so, you’ve probably been keeping an eye on two key depreciation-related tax breaks: bonus depreciation and Section 179 expensing.

The good news is that both get a substantial boost from the One, Big, Beautiful Bill Act (OBBBA). And this could have a significant impact on your asset investment and year-end tax planning strategies.

Rocky landscape

Before the OBBBA, the tax landscape was set to become decidedly rockier for construction companies looking to make capital investments.

Let’s start with bonus depreciation. It allows businesses to immediately deduct a percentage of the cost of eligible new or used property in the year the asset is placed in service. Doing so is usually preferable to spreading out smaller write-offs over several years under regular depreciation rules. However, under the Tax Cuts and Jobs Act (TCJA), the bonus depreciation deductible percentage, which was initially 100%, began to drop by 20 percentage points annually and was 40% for 2025. It was scheduled to vanish after 2026.

Then there’s Sec. 179 expensing. This deduction allows you to expense the full cost of qualifying assets up to a dollar limit, also in the year they’re placed into service. The limit begins to phase out dollar for dollar when asset acquisitions for the year exceed an annual threshold. These amounts were increasing modestly, as adjusted for inflation. The previously scheduled 2025 limit was $1.25 million with a phaseout threshold of $3.13 million.

Generous changes

The OBBBA brings generous changes to both tax breaks. First, it permanently restores 100% bonus depreciation, effective for assets purchased and placed in service after January 19, 2025. For assets acquired on January 19 or earlier but not placed in service until after that date, the pre-OBBBA depreciation percentages for the actual placed-in-service year generally apply. For example, if an asset was purchased on January 10, 2025, and placed in service on February 10, 2025, 40% bonus depreciation would apply.

Second, the law raises the Sec. 179 expensing limit for 2025 to $2.5 million with a higher phaseout threshold of $4 million. (These amounts will be adjusted for inflation annually.) Compare those numbers to the previously scheduled ones under the TCJA.

Careful planning

Enhanced bonus depreciation and Sec. 179 expensing offer generous tax benefits under the right circumstances. However, taking advantage of them calls for careful planning. You don’t want to rush out and buy a costly piece of equipment just for a tax break.

Then again, if you’re ready to acquire an asset, bear in mind that eligible property must be purchased and put into service before year end if you want to claim the break on this year’s tax return. Manufacturer backlogs or slow delivery times could upend your plans if you wait too long.

Much depends on your current financial position. For example, let’s say you expect to finish a few big projects in 2025 and report a high amount of taxable income. In such a case, investing in pricey equipment before year end may help reduce your tax liability while supporting next year’s operations.

Both tax breaks remain available to businesses that finance their purchases — as long as the assets in question are placed in service during the tax year. So, if you’re buying expensive heavy-duty machinery or specialized tools, such as an excavator or wheel loader, you can still set up a payment plan to help you manage cash flow while claiming the full deduction.

Considerable impact

The OBBBA makes a considerable impact on more than just depreciation-related tax breaks. It contains many other provisions that will likely interest construction business owners and leadership. Examples include making the qualified business income deduction permanent, creating a 100% deduction for “qualified production property” (which may spur commercial projects) and eliminating tax credits related to clean energy. Work closely with your CPA to leverage the law to your advantage.

© 2025