Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) is a sweeping package of tax and spending provisions that will dramatically reshape the tax planning landscape in the coming years. Among its most impactful changes are those affecting depreciation. With the permanent return of 100% bonus depreciation, a major increase in Section 179 expensing, and a brand-new deduction for Qualified Production Property (QPP), businesses now have greater opportunities than ever to accelerate deductions, improve cash flow, and unlock savings.
At the center of these opportunities are cost segregation studies—a proven tax strategy that allows building owners to identify and reclassify certain components of their property into shorter recovery periods. By doing so, taxpayers can take advantage of accelerated depreciation methods and maximize the benefits of the OBBBA’s new incentives.
The Value of Cost Segregation Studies
Typically, nonresidential buildings are depreciated over a period 39 years (or 27.5 years for residential rental property), which thinly spreads deductions across decades. A cost segregation study, however, dissects a property into its individual components—such as electrical systems, HVAC, finishes, site improvements, and more. Many of these assets can be depreciated over 5, 7, or 15 years instead.
Under the OBBBA, these shorter-life assets can often be immediately deducted in the year they are placed into service through bonus depreciation or Section 179 expensing. This makes cost segregation more powerful than ever: each dollar shifted into a shorter recovery period could translate into a dollar deducted today, rather than years from now.
Key Provisions of the OBBBA That Amplify Cost Segregation Benefits
Certain provisions of the new law are particularly valuable for heightening the impact of cost segregation studies. These include:
- Qualified Production Property (QPP) Deduction. The OBBBA has introduced a brand-new opportunity for manufacturers and similar industries—the Qualified Production Property (QPP) deduction:
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- Property used in qualified production activity—such as manufacturing, refining, or processing tangible personal property—may be fully deducted in the year placed into service.
- To qualify, construction must begin after January 19, 2025, and before January 1, 2029, with the property placed in service by January 1, 2031.
For manufacturers and producers constructing new facilities, a cost segregation study can help identify which portions of the building may qualify for this powerful first-year deduction.
- Permanent 100% Bonus Depreciation. The OBBBA permanently reinstates 100% bonus depreciation for qualifying property acquired and placed into service after January 19, 2025. This provision reverses the previous phase-down schedule, which had bonus depreciation falling to 40% in 2026 and disappearing entirely thereafter. Now, building owners and investors can be confident that short-life property reclassified through a cost segregation study will be fully deductible in the first year.
- Expanded Section 179 Expensing. Section 179 of the tax code allows businesses to deduct the cost of qualifying property—such as equipment, machinery, and certain improvements—rather than depreciating them over time. The OBBBA doubles the Section 179 cap from $1.25 million to $2.5 million annually, significantly increasing the benefit for small and midsized businesses. When paired with cost segregation, Section 179 can be used for smaller assets and personal property, while bonus depreciation covers larger reclassified components, ensuring that no tax savings are left on the table.
Why Now is the Time for Cost Segregation
With these changes in place, cost segregation studies are a particularly smart tax strategy for many businesses. By unlocking accelerated deductions, taxpayers can do the following:
- Improve cash flow to fund growth, debt reduction, or reinvestment
- Increase the ROI on new construction, acquisition, or renovation projects
- Maximize the combined benefits of bonus depreciation, Section 179, and QPP deductions
- Take advantage of time-sensitive opportunities, as certain provisions—including QPP—are set to expire after 2029
Maximize Tax Savings with Cost Segregation Studies from CRG
The One Big Beautiful Bill Act has created an unprecedented opportunity to capture large upfront deductions through cost segregation. However, these studies require specialized tax and engineering expertise to ensure compliance with IRS guidelines and to identify every eligible asset.
At Capital Review Group, our team has extensive experience conducting cost segregation studies for clients across several different industries. We can help businesses navigate the new provisions of the OBBBA and implement strategies that maximize savings today while positioning for long-term success. Contact us today to schedule a consultation and learn how a cost segregation study can transform your next project into powerful tax savings!