New Equipment Financing Code Could Benefit Your Business

When the One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, it ushered in one of the most significant federal tax updates in years. The sweeping legislation covers everything from healthcare to spending policy, but for businesses, some of the most meaningful changes are those that encourage reinvestment in equipment and capital assets.

To understand what these changes mean for businesses, we sat down with Garrett Schneider, VP, Regional Director of Sales, Equipment Finance Group at SouthState, who shared insights on how business owners can maximize these new opportunities.

The new provisions allow businesses to maximize immediate tax savings, expand their deduction limits, and take advantage of more flexible financing options. For companies that rely on equipment, whether in construction, manufacturing, transportation, or other capital-heavy industries, these changes can make a noticeable difference in both cash flow and tax planning.

A Bill Designed to Incentivize Business Investment

“For business owners, one of the biggest takeaways is the effort to reduce tax burden and incentivize investment—not just in their own businesses, but in the larger economy,” Schneider explains. Among the many changes in the OBBBA, three stand out for their impact on equipment financing and leasing:

• Restoration of 100% bonus depreciation allows companies to deduct the full cost of qualifying assets in the year they are placed in service.

• Increased Section 179 deduction limits, now up to $2.5 million, gives businesses the ability to write off more capital expenditures immediately.

• Expanded interest expense deductions through an updated definition of EBITDA, creates additional financing flexibility.

Together, these provisions give business owners multiple ways to reduce taxable income and invest in growth. Bonus depreciation and Section 179 deductions serve similar purpose by both enabling immediate expensing of equipment. However, they differ slightly in qualification and application. Many business owners use both to maximize their savings, a combination sometimes referred to as a “belt and suspenders” approach because it provides two paths to the same outcome: a lower tax burden. Larger borrowers with qualifying purchases exceeding $4 million begin to phase out of the Section 179 limit, at which point they will rely on the provisions covered under the restoration of bonus depreciation.

Turning Tax Law into Real Savings

The most powerful change for most companies is the return of 100% bonus depreciation. Previously, bonus depreciation had been phasing down to 40% in 2025, but under the new law, businesses can now deduct the full value of qualifying assets in the year they’re purchased.

Even better, the new rule is retroactive to assets placed in service after January 19, 2025, so businesses that made qualifying purchases earlier this year can still benefit. The 100% bonus depreciation provision is written into law in perpetuity, while Section 179 may be subject to future renewal. Still, both provide meaningful opportunities to capture savings now.

The scope of what qualifies is broad. Most tangible business equipment, such as construction machinery, trucks, trailers, manufacturing tools, technology systems, medical devices, and even HVAC or security systems for commercial buildings, falls within the guidelines. In general, if the asset is used in operations and has a useful life of 20 years or less, it likely qualifies.

Financing or Leasing: Choosing the Right Strategy

Once a business identifies qualifying purchases, the next decision is how to acquire them. Both financing and leasing can help companies take advantage of these tax changes, but the best choice depends on cash flow, profitability, and long-term goals.

For businesses projecting strong profits, traditional debt equipment financing often provides the greatest benefit. When a company owns the asset outright, it can directly claim depreciation and other deductions to offset taxable income. This is particularly valuable for firms that want to lower their tax burden while retaining ownership of the equipment.

Leasing, on the other hand, offers advantages for companies that want to preserve cash flow or expect a lower taxable income for the year. In a lease structure, the bank owns the equipment and carries the depreciation. That benefit is passed along to the client in the form of lower monthly payments, making leasing an attractive option for businesses focused on minimizing short-term expenses.

Leasing can also be an effective strategy for managing assets with short lifespans or fast-changing technology. Instead of tying up capital in equipment that may become obsolete within a few years, a business can lease it and upgrade more easily at the end of the term. This approach keeps operations modern while avoiding large one-time costs.

Timing and Strategic Planning Matter

Many business owners wait until late in the year to think about capital purchases, but under the new tax environment, timing is everything. The final weeks of December are often the busiest for equipment financing, as companies look for ways to reduce taxable income before year-end. However, making decisions earlier in the year provides more flexibility and ensures equipment is placed in service in time to qualify.

Because the OBBBA changes are retroactive to January 19, 2025, there’s still time to act for this tax year. In fact, many companies are moving up 2026 purchases to capture the full 2025 deduction. For example, some transportation and manufacturing firms have accelerated orders that were originally planned for next year in order to benefit now.

One SouthState client, a regional transportation company, took this approach. After holding off on fleet replacements in anticipation of the new bill, they moved forward as soon as bonus depreciation was restored. Within a few months, they financed 20 new tractors, refreshing their fleet while dramatically reducing taxable income for the year.

This type of strategic timing—aligning purchases with policy changes—demonstrates how proactive planning can translate into meaningful financial gains.

Industries That Stand to Benefit

The tax code updates create opportunities across many industries, but they’re especially beneficial for organizations with large capital budgets and recurring equipment investments. Construction, transportation, logistics, manufacturing, and healthcare companies are among those most likely to benefit.

Even smaller businesses can realize meaningful advantages if they plan carefully. For some, the biggest barrier is simply awareness. Large corporations and mid-market firms often have dedicated financial teams monitoring these changes, but smaller operations may not. By working closely with a banker and accountant, these business owners can uncover savings that might otherwise be missed.

Partnering with Experts

While it’s important for businesses to understand the basics of the new law, every company’s situation is unique. Bankers and accountants play complementary roles in helping clients make sound financial decisions. Accountants can confirm which assets qualify and how deductions will impact tax liability. Bankers can help structure financing and leasing options that align with both cash flow and long-term investment objectives.

At SouthState, our role is to serve as a consultative partner helping clients identify opportunities, understand trade-offs, and move quickly when timing matters. “We walk them through the trade-offs of loans versus leases and help them make informed decisions that align with their goals,” says Schneider.

A Favorable Environment for Equipment Investment

The combination of 100% bonus depreciation, increased Section 179 limits, and expanded financing deductions creates one of the most favorable environments for equipment investment in years. These changes were designed to strengthen the economy by encouraging business reinvestment and they’re already doing just that.

For many companies, this is the ideal moment to re-evaluate capital plans, refresh equipment, and modernize operations. Businesses that act before year-end can position themselves for both immediate tax savings and long-term growth.

Schneider notes, “Every company’s situation is unique, but the common thread is opportunity. The government has created powerful incentives to reinvest in your business. Work with your accountant, talk with your banker, and take advantage of these provisions before year-end.” Now is the time to look ahead, plan strategically, and make the most of the opportunities created by these historic tax changes.