How does the One Big Beautiful Bill impact equipment financing?
The house recently passed the “One Big Beautiful Bill Act” (OBBBA) with significant changes to federal tax policy, but what does that mean for our customers looking to finance or lease equipment? Bonus depreciation, Section 179, and Interest Expense Deductions have all received updates that benefit businesses looking to lease or finance equipment. We’ve outlined a few of the advantages these changes bring to equipment financing.
OBBBA Impact on Equipment Finance:
- 100% bonus depreciation restored
- Section 179 expensing cap raised to $2.5 million
- Interest deduction rules improved (EBITDA-based)
- Stronger financial incentive to lease or finance equipment
100% Bonus Depreciation Restored
Businesses can immediately expense qualifying assets placed in service after January 19, 2025, eliminating the previously scheduled phase-down.
Effect: Businesses can immediately write off the full cost of new equipment, reducing taxable income in the year of purchase.
Section 179 Expensing Cap Increased
Small businesses can expense up to $2.5 million in qualifying property, creating an expanded opportunity for equipment-heavy operations to write-off costs. The phase-out threshold also rises to $4 million, enabling more businesses to take full advantage of these deductions
Effect: Small and mid-sized businesses will be able to expense even more equipment upfront, significantly lowering their near-term tax burden.
Interest Expense Deduction Enhanced
The new law reverts the business interest deduction to an EBITDA-based limit instead of EBIT—allowing many companies to deduct more interest on financed purchases.
Effect: Businesses can deduct more interest on financed equipment, improving after-tax cash flow and making borrowing more attractive while reducing the total cost of ownership.
These new tax incentives represent a significant opportunity, but each business and situation is unique. Always consult with your CPA or tax professional to determine the best course of action for your business.
If you’re considering a major equipment purchase or lease, now is the time to act. Take advantage of these changes to finance the equipment your business needs to fuel your growth.
Ready to take the next step? AP can help. Apply Now or Contact Us to learn more.
*Please consult your tax consultant/accountant to fully understand the benefits and implications of bonus depreciation, Section 179, and how OBBBA will impact your business.