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 bonus depreciation eligibility. Furthermore, the modifications now include dealers specializing in towables (boats, trailers, campers).

The 20% qualified business income deduction under Section 199A has been made permanent, helping S corporations and partnerships remain competitive with C corporations for income tax purposes.

These provisions are expected to improve the dealership's cash flow and internal rate of return (IRR), making acquisitions more attractive and potentially increasing valuations. In a capital-intensive industry like automotive retail, where financing plays a critical role in operations and growth, this legislative change can significantly strengthen the economic resilience and competitiveness of dealerships.

Electric Vehicle Incentives

While the bill eliminates the alternative fuel vehicle refueling property credit after June 30, 2026, and phases out EV purchase credits by Sept. 30, 2025, it creates urgency for dealerships to install charging infrastructure and move electric vehicle inventory before those deadlines.

Dealerships already compliant with OEM EV requirements may see increased valuations, as buyers avoid future installation costs and improvements.

Section 179D

Under pre-OBBBA law, a deduction under Section 179D was available for companies that own or design newly constructed or renovated commercial buildings which met certain energy efficiency standards. For Tax Year 2025, the deduction ranges between $0.58 per square foot of building area to $5.81 per square foot of building area, depending on compliance with the prevailing wage and apprenticeship requirements within the Inflation Reduction Act. While the OBBBA terminates the 179D deduction, the deduction remains available for commercial buildings where construction begins on or before June 30, 2026. This can be a useful strategy to increase cash flow on newly constructed facilities until the opportunity phases out.

Consumer incentives aim to boost sales

To stimulate demand, the bill introduces a $10,000 annual credit for interest paid on new auto loans, even for those taking the standard deduction. This could make new vehicles more affordable, especially when paired with manufacturer rebates and financing incentives.

The state and local tax (SALT) deduction cap has also been raised from $10,000 to $40,000 for individuals earning under $500,000 annually. By allowing a larger portion of state and local taxes to be deducted, the bill increases after-tax disposable income for a substantial segment of the population. This change is particularly impactful in high-tax states like New York and California, where many taxpayers previously hit the SALT cap and saw limited federal tax relief.

By reducing financial hurdles to vehicle ownership, these provisions simultaneously enhance consumer confidence and spending power.

Strategic shifts for buyers and sellers

For buyers, the enhanced depreciation and interest deductions introduced by the bill significantly improve the investment appeal of acquisition deals. These tax benefits reduce the effective cost of capital and increase post-tax cash flows, enabling buyers to offer higher purchase prices while still achieving their target internal rates of return (IRRs). This makes acquisitions more feasible and appealing, especially in competitive markets.

Sellers are also likely to see higher valuations for their businesses, as more buyers enter the market with greater financial flexibility. This creates a more advantageous environment for dealership owners looking to exit or transition ownership.

The bill also locks in the estate tax exemption at $15 million per individual. This offers substantial estate planning advantages for dealership owners, particularly those considering a sale or succession planning.

Why should dealerships act now?

The OBBBA delivers a rare combination of tax relief, investment incentives and consumer stimulus that positions dealerships for growth. Whether investing in infrastructure, planning a sale or reevaluating acquisition strategies, dealerships are encouraged to act swiftly because the window to capitalize on these benefits may be limited.

Contact our team to help your company tailor strategies that align with the new tax environment and maximize long-term value. Our team is here to help you navigate these regulations effectively.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.