OBBBA Tenant Improvements & 100% Bonus Depreciation: A Win for Weston Tenants

The recently passed One Big Beautiful Bill Act (OBBBA) has introduced a powerful incentive for businesses leasing industrial real estate: the permanent reinstatement of 100% bonus depreciation for qualifying property placed in service after January 19, 2025. For Weston tenants—especially mid-market companies investing in tenant improvements—this change could significantly reduce tax burdens and improve cash flow.

What Is 100% Bonus Depreciation?

Bonus depreciation allows businesses to immediately deduct 100% of the cost of qualifying property in the year it’s placed in service, rather than spreading the deduction over several years. This includes many types of tenant improvements, such as:

• Interior drywall and partitions
• HVAC systems
• Electrical and plumbing upgrades
• Interior doors and ceilings
• Lighting and fire protection systems

These improvements fall under Qualified Improvement Property (QIP), which is now fully eligible for bonus depreciation.

Why This Matters for Weston Tenants

• Immediate Tax Savings
  Tenants investing in build-outs or upgrades can now fully expense those costs in the same year, reducing taxable income and freeing up capital for growth.
• Improved Cash Flow
  By accelerating depreciation, tenants can retain more cash—ideal for reinvesting in operations, hiring, or expanding product lines.
• Strategic Planning Opportunities
  With bonus depreciation now permanent, tenants can plan long-term improvements with confidence, knowing the tax benefits will remain stable.

Who Benefits Most?

This change is especially impactful for:

• Manufacturers upgrading facilities for automation or compliance
• Logistics firms enhancing warehouse infrastructure
• Tech-enabled industrial tenants investing in smart systems
• Mid-market companies scaling operations in Weston properties

A Note on State-Level Rules and Compliance

While the federal government embraces this change, some states may not conform to bonus depreciation rules. Tenants operating in multiple states should consult their tax advisors to avoid unexpected liabilities. As always, tenants should consult with their tax advisor to confirm eligibility for bonus depreciation and ensure compliance with both federal and state tax regulations.

How Weston Can Help

If you’re considering tenant improvements in 2025, now is the time to act. Reach out to your Weston leasing contact to explore how you can improve your space and align lease terms with improvement timelines.