The Unsung Hero of the OBBBA: Permanent Expensing
Alex Brill and Paul Teller | RealClearMarkets
The One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, prevented a large, scheduled tax hike from hitting American households. By permanently extending expiring provisions of the 2017 Tax Cuts and Jobs Act, the OBBB stopped the standard deduction and child tax credit from being cut in half, locked in lower individual income tax rates, and made a wide range of other tax provisions permanent. Republican lawmakers have been highlighting these achievements, along with the bill’s exemptions for tips and overtime pay, policies on which President Trump campaigned.
Yet, one of the OBBB’s most powerful pro-growth reforms has gone largely unnoticed: permanent immediate expensing for new equipment investment. While perhaps too wonky for townhall forums, this change is a critically important step on the long path toward fundamental tax reform.
Permanent immediate expensing allows businesses to deduct the full cost of equipment purchases in the year of investment, rather than spreading the deductions over multiple years. Given the time value of money, it is better to deduct the full cost of a new investment today, as opposed to deducting that investment in smaller increments over multiple years. This change ensures that businesses are allowed to deduct the full value of their investments, preventing inflation from devaluing these business costs.
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