As the year draws to a close, manufacturers and business owners are looking for strategic ways to reduce taxable income, strengthen cash flow, and gear up for growth in the coming year. This year brings even bigger opportunities than usual—thanks to major updates in federal tax law.

With the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, businesses can now enjoy permanent, expanded tax incentives for purchasing capital equipment. At KJ Auctions, that means your year-end bids could translate into substantial deductions, stronger financial footing, and more room to invest back into your business.

Below are the top tax advantages available right now—and how purchasing at auction before December 31 helps you capture them.

1. Expanded Section 179 Expensing: Deduct Up to $2.5 Million Immediately

The updated Section 179 deduction is one of the most important tools available to manufacturers and small-to-mid-sized businesses.

Here’s what OBBBA changed for 2025:

• Deduction Limit: Up to $2.5 million
• Phase-Out Threshold: Begins when total equipment purchases exceed $4 million
• Qualifying Property:
  • New and used manufacturing equipment
  • Off-the-shelf software
  • Business vehicles (subject to limits)
  • Improvements to existing buildings (roofs, HVAC, security systems, etc.)

Instead of depreciating equipment over multiple years, Section 179 allows you to deduct the full purchase price of qualifying assets in the year they are placed in service.

For buyers at KJ Auctions, that could mean turning a major machinery purchase into a major tax advantage—right away.

2. 100% Bonus Depreciation Returns—Permanently

OBBBA also reinstated 100% bonus depreciation for qualifying property placed into service after January 19, 2025. This is game-changing. What this means for buyers:

• You can immediately deduct 100% of the cost of eligible equipment.
• Bonus depreciation applies to both new and used machinery.
• As long as the equipment is new to your business, it qualifies.
• The benefit is permanent, giving manufacturers long-term clarity for investment planning.

Businesses typically apply:

1. Section 179 first (up to $2.5M), then
2. Bonus depreciation on any remaining cost.

Together, these incentives often allow businesses to deduct 100% of all equipment purchases in the year of acquisition—something that makes year-end buying especially attractive.

3. Additional Federal Incentives Manufacturers Should Know

While Section 179 and bonus depreciation get the headline, OBBBA includes other incentives that strengthen the case for upgrading your equipment now.

R&D Expense Deduction

Businesses can now immediately deduct domestic R&D expenses—including process improvements tied to the use of new machinery. No more five-year amortization.

Advanced Manufacturing Investment Credit

A credit of up to 35% for qualifying U.S.-based advanced manufacturing equipment and facilities.
This is especially relevant for semiconductor-related production but may extend to supporting industries.

4. Don’t Forget State and Local Incentives

Depending on your location, you may also benefit from:

• Sales and use tax exemptions on qualifying machinery
• State investment tax credits for equipment purchases
• Local programs, including TIF, supporting site development or facility upgrades

These vary widely by state and municipality, but they can meaningfully reduce the cost of equipment purchased at auction.

5. Auctions Maximize Your Purchasing Power

Even before tax incentives, buying at KJ Auctions gives businesses a financial edge:

• Access to quality used equipment at highly competitive prices
• Faster turnaround—equipment is available immediately
• Transparent inspection reports and documentation
• The ability to scale operations without overextending capital

When combined with 2025's new federal tax incentives, many buyers discover that the after-tax cost of auction equipment is far lower than expected.

6. Act Before December 31 to Capture 2025 Benefits

To qualify for these incentives, equipment must be purchased and placed into service by the end of the year. That makes participation in KJ Auctions’ year-end events a strategic decision—especially if you're planning upgrades, expanding production, or preparing for new contracts in 2026.

As always, buyers should consult their tax professional for guidance on claiming these benefits, but the opportunity window is open right now.

Turn Year-End Purchases Into Year-End and Long-Term Savings

The 2025 tax landscape is one of the most favorable in years for equipment buyers. Between Section 179, 100% bonus depreciation, R&D deductions, and state/local incentives, your next equipment purchase could have a major impact on your tax bill—and your ability to compete in the year ahead.

If you're ready to take advantage of these powerful incentives, explore KJ Auctions’ upcoming events, register to bid, or connect with our team for more information.

Bid smart. Save big. Build for what's next.