global Tax Inside OBBBA: How 100% Bonus Depreciation is Reshaping Cost Segregation August 21, 2025 The One Big Beautiful Bill Act (OBBBA) is rewriting the rules of tax planning, with provisions that directly impact how businesses manage cash flow and maximize deductions. One of the most significant changes is the permanent return of 100% bonus depreciation, a shift that brings new urgency and opportunity to cost segregation strategies. To unpack what this means for property owners and business leaders, we sat down with Meyer Levy, KLR’s Cost Segregation Practice Leader and Co-Chair of the Real Estate Practice, who brings over 35 years of experience helping clients leverage cost segregation to their advantage. In this Q&A, Meyer explains how the reinstated bonus depreciation will reshape the cost segregation landscape, and why now may be the most advantageous time to revisit your tax strategy.Q&A: OBBBA Enhances Cost Segregation OpportunitiesQ: Before we get into recent legislation, can you give us a quick refresher on what cost segregation is and why businesses use it?Meyer: Absolutely. Cost segregation is a tax planning tool that allows property owners to accelerate depreciation on certain components of a building. By identifying parts of a commercial property that can be depreciated over shorter periods, like five, seven, or fifteen years instead of the standard 39 years, you can accelerate depreciation thereby reducing taxes and increasing cash flow.Q: Can you explain how bonus depreciation rules have changed under OBBBA?Meyer: Under old law, bonus depreciation was phasing out from 100% to 80%, 60%, and then 40% this year, followed by 20% next year before it disappeared. Now, OBBBA restores it to 100% permanently.Here’s why that matters: When you buy a commercial building, you’d normally depreciate it over 39 years. With a cost segregation study, we can identify components that qualify for shorter lives: five, seven, or fifteen years. Bonus depreciation applies to those shorter-life assets, but not to the 39-year property.For example, say you purchase a $5 million building. A cost segregation study might reclassify $1 million of that into 5-, 7-, or 15-year property. Without bonus depreciation, you’d write that $1 million off over those shorter periods. But now, with 100% bonus depreciation, you can write off that $1 million in the first year.Q: Why does reinstating 100% bonus depreciation make cost segregation more valuable?Meyer: The benefit is immediate. The cost benefit is going to be significant when comparing the fee to complete the study vs. the accelerated depreciation received.Q: Which industries or property owners will benefit most from this change?Meyer: This applies across the board. It applies to anyone who owns real estate, whether you’re in the real estate business or not. Many of our clients are manufacturers, distributors, professional firms, you name it, but they own the property where their business operates. Any time they buy property or make significant improvements, this applies.Q: What do business owners need to know in the coming months about the reinstatement of 100% bonus depreciation?Meyer: The main message is simple: 100% bonus depreciation is back. If you’re buying, building, or improving property, the tax benefits from a cost segregation study are now much greater than they were under the old law as bonus depreciation was being phased out.Q: How does Section 179 work alongside bonus depreciation in a cost segregation strategy?Meyer: Section 179 can be another useful tool. Sometimes we’ll use both Section 179 and bonus depreciation in combination. Bonus depreciation is unlimited in amount but often not allowed for state taxes. Section 179 is capped at $2.5 million for 2025, but most states follow the federal rules for Section 179.Choosing between them (or using both) depends on the client’s tax situation. For example, if a company is in a loss position, Section 179 gets carried forward, but bonus depreciation can still be taken immediately. So, we run the numbers on a case-by-case basis to determine the best mix.Q: I understand there are additional benefits for manufacturing businesses under the new law?Meyer: Yes. If you’re in the manufacturing business and build a new facility, the benefits could be even greater. In some cases, much more of the building’s cost could qualify for bonus depreciation. We’re waiting on additional IRS clarification, so we’re being careful in how we approach this, but there’s definitely potential there.The bottom line is: if you own property and are building, buying, or improving it, this is the time to revisit cost segregation. The numbers under 100% bonus depreciation can be game-changing. Wondering what other tax strategies are being reshaped by OBBBA? This conversation with Meyer is just the beginning of our Inside OBBBA series. Next up, Deb Pallasch will share her perspective on how the new legislation affects the R&D tax credit, and Brad Lombardi will provide insights on OBBBA’s impact on international tax strategies. Stay tuned as we continue to break down the provisions that matter most to businesses and their leaders.Don’t forget to check out our comprehensive summaries of OBBBA’s impact on individuals and businesses.
