The dealerships One Big Beautiful Bill summary

The dealership industry is experiencing a wave of change following the passage of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4. This One Big Beautiful Bill summary highlights how the legislation introduces sweeping tax reforms and incentives that are expected to significantly impact dealership operations, valuations and consumer behavior.

What do the new changes mean for dealerships?

Bonus deprecation & 179 Expensing

One of the most notable changes is the return of 100% bonus depreciation for qualified property acquired after Jan. 20, 2025. This allows dealerships to immediately expense items like equipment, furniture and fixtures and other qualifying property with shorter depreciable lives, such as 5, 7, or 15-years. While real estate remains on a 39-year depreciation schedule, cost segregation studies can position taxpayers to reclassify a significant portion of their total spend into these shorter tax lives—potentially up to 35%. By leveraging full bonus depreciation, this strategy can substantially increase cash flow for the taxpayer.

The bill also increases the Section 179 expensing limit to $2.5 million, offering dealerships more flexibility to write off capital investments. This provision applies to property placed in-service in taxable years beginning after Dec. 31, 2024. However, there is a $4m annual limitation as to the amount of qualified property placed in service. Every dollar of Section 179 qualified property placed in service over $4m reduces your Section 179 deduction dollar for dollar.

The specific deduction limitations for certain vehicles still remains intact under OBBBA.

Improved cash flow and deductions

The legislation reinstates earnings before interest, taxes, depreciation and amortization (EBITDA) as the basis for calculating the business interest deduction under Section 163J, raising the ceiling for deductible interest. This change is especially beneficial for dealerships with goodwill/blue sky amortization; and reduces the likelihood that dealers will use the floor plan exception, which affects