Insights

Key Highlights

Overview

• The maximum Section 179 deduction is increased to $2.5 million for property placed in service after December 31, 2024124.
• The phase-out threshold begins at $4 million in purchases for the year124.
• These amounts will continue to be adjusted annually for inflation1.
• Under current law (for 2025, prior to the bill), the expensing limit is $1.25 million and the phase-out threshold is $3.13 million123.

• Expanded Section 179 Limits: The bill proposes a significant increase to the section 179 deduction limit, allowing businesses to immediately expense more capital purchases, such as equipment, vehicles, and software. This change is designed to stimulate investment in productivity and growth.
• Special Vehicle Rules: SUVs over 6,000 lbs. gross vehicle weight rating (GVWR) but under 14,000 lbs. are subject to a specific Section 179 cap (currently $31,300 for 2025), with the remainder eligible for bonus depreciation3. Heavy vehicles (trucks, vans) over 6,000 lbs. GVWR may qualify for full Section 179 expensing3.
• R&D Credit Expansion: Smaller businesses-especially startups-stand to benefit from an enhanced Research & Development Tax credit. The bill raises the cap on creditable expenses and makes it easier for qualifying businesses to offset payroll tax liabilities.
• Standard Deduction & Child Tax Credit Adjustments: For individuals, the standard deduction is set to increase again and the Child Tax Credit may be temporarily expanded, both in amount and eligibility.
• New IRS Enforcement Framework: The legislation allocates further funding to the IRS for technology upgrades and audit initiatives-particularly for high-income tax payers and large partnerships. Increased enforcement is expected, so proactive compliance is more important than ever.
• Energy Efficiency Incentives: The bill includes extended tax credit for energy-efficient commercial buildings and EV-related infrastructure Businesses investing in the green upgrades may qualify for sizable credits starting the year.