2025 has brought significant changes to depreciation tax rules across major economies. This guide summarizes the most important updates affecting businesses and investors in the US, UK, and Australia.
United States: OBBBA Tax Reform
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, is the most significant US depreciation reform since the 2017 Tax Cuts and Jobs Act. Key provisions:
100% Bonus Depreciation Restored
- Applies to qualified property acquired after January 19, 2025
- Overrides the TCJA phase-down (was scheduled at 40% for 2025)
- Covers both new and used property (new to the taxpayer)
- Includes qualified improvement property (QIP)
Section 179 Doubled (and Inflation-Adjusted for 2026)
| Parameter | 2024 (Pre-OBBBA) | 2025 (OBBBA) | 2026 (Adjusted) |
|---|---|---|---|
| Deduction Limit | $1,220,000 | $2,500,000 | $2,560,000 |
| Phase-Out Threshold | $3,050,000 | $4,000,000 | $4,090,000 |
| Full Phase-Out | $4,270,000 | $6,500,000 | $6,650,000 |
| SUV Limit | $28,900 | $31,300 | TBD (indexed) |
The OBBBA Section 179 limits are indexed for inflation annually. For 2026, the IRS has confirmed the deduction limit rises to $2,560,000 and the phase-out threshold increases to $4,090,000 (IRS Notice 2026-11).
Section 280F Vehicle Limits (2025)
| Tax Year | With Bonus | Without Bonus |
|---|---|---|
| Year 1 | $20,200 | $12,200 |
| Year 2 | $19,600 | $19,600 |
| Year 3 | $11,800 | $11,800 |
| Year 4+ | $7,060 | $7,060 |
Try the updated Section 179 Calculator →
United Kingdom: WDA Rate Changes & New FYA
The UK continues to offer one of the most competitive capital allowance regimes in the developed world, with several important changes taking effect in 2025–2026:
Full Expensing (Permanent)
- 100% first-year allowance for qualifying main-rate plant & machinery
- 50% first-year allowance for special-rate assets
- Available to companies only (not sole traders/partnerships)
- No annual cap — covers purchases of any size
- Made permanent from April 2023
Writing Down Allowance (WDA) Rate Reduction
| Pool | Rate (to March 2026) | Rate (from April 2026) |
|---|---|---|
| Main Pool | 18% | 14% |
| Special Rate Pool | 6% | 6% (unchanged) |
Update (2026): The main pool WDA rate reduction from 18% to 14% takes effect April 1, 2026 for companies and April 6, 2026 for unincorporated businesses. For accounting periods straddling the effective date, a hybrid rate applies — the WDA is calculated proportionally using 18% for the pre-April portion and 14% for the post-April portion.
New 40% First Year Allowance (Now Effective)
- Effective from January 1, 2026 — this provision is now in force
- Applies to qualifying main-rate plant and machinery expenditure, including by unincorporated businesses and for leasing assets
- Provides a broader alternative to the 50% FYA under Full Expensing, particularly for sole traders and partnerships who cannot use Full Expensing
EV Charging Point FYA
The 100% First Year Allowance for electric vehicle charging points has been extended through March 2027. This applies to both businesses and individuals installing charging equipment.
Try the updated UK Capital Allowances Calculator →
Australia: Instant Asset Write-Off Extended
Australia continues to support small business investment with key depreciation concessions:
$20,000 Instant Asset Write-Off (Expiring June 2026)
- Extended through June 30, 2026
- Applies to small businesses with aggregated turnover under $10 million
- Per-asset threshold: each asset must cost less than $20,000
- Assets of $20,000 or more go into the small business depreciation pool (15% first year, 30% subsequent years)
Important (2026): Unless further legislation is passed, the $20,000 threshold will revert to $1,000 after June 30, 2026 — meaning virtually all asset purchases would go into the depreciation pool rather than being immediately written off. Industry groups are lobbying for a permanent increase (up to $150,000), but no extension has been confirmed at this time. Small businesses should plan eligible purchases before the June 30 deadline.
Car Cost Limit
For 2024–25, the car cost limit is $69,674 (GST inclusive). Depreciation can only be claimed on costs up to this limit, regardless of the actual purchase price. This limit applies per vehicle and is indexed annually.
ATO Effective Life Rulings
The ATO's effective life determinations (TR 2024/3) continue to be the reference for depreciation rates. Businesses can choose between the Commissioner's determination or self-assessing a different effective life where circumstances differ.
Try the updated ATO Depreciation Calculator →
Singapore: Budget 2026 & Capital Allowances
Singapore's capital allowance framework under Sections 19 and 19A remains unchanged in Budget 2026, but several important business incentives were announced:
40% Corporate Income Tax Rebate (YA 2026)
- 40% CIT rebate for Year of Assessment 2026, capped at S$30,000
- Minimum S$1,500 cash grant for active companies that employed at least one local employee in 2025
- Designed to help businesses manage rising costs
Enterprise Innovation Scheme (EIS) — AI Expansion
- EIS expanded to include qualifying AI expenditures as a new qualifying activity for YA 2027 and YA 2028
- 400% tax deduction on up to S$50,000 of qualifying AI spending per YA
- Existing EIS activities (R&D, IP, training, innovation projects) continue with 400% deductions capped at S$400,000
Capital Allowance Framework (Unchanged)
- Section 19A (3-year): Accelerated write-off for all plant and machinery — remains the most common option
- Section 19A (1-year): 100% write-off for computers, robots, prescribed automation equipment
- 2-year accelerated (75%/25%): Was available for YA 2021, 2022, and 2024 — not extended in Budget 2026
- Section 19: Write-off over prescribed working life (6 or 12 years from YA 2023)
Try the Singapore IRAS Calculator →
Impact Summary
| Country | Key Change | Effective Date | Impact |
|---|---|---|---|
| US | 100% Bonus Depreciation Restored | Jan 19, 2025 | Full first-year expensing for most assets |
| US | Section 179 Doubled to $2.5M | 2025 Tax Year | More businesses qualify for full expensing |
| US | Section 179 → $2,560,000 (2026) | 2026 Tax Year | Inflation-adjusted from $2.5M |
| UK | WDA Main Rate 18% → 14% | April 1, 2026 | Now effective — slower recovery for non-FE assets |
| UK | 40% FYA (now in force) | January 1, 2026 | Broader first-year relief including sole traders |
| Australia | $20k Write-Off Expiring | June 30, 2026 | Reverts to $1,000 unless extended |
| Singapore | 40% CIT Rebate | YA 2026 | Up to S$30,000 tax savings |
| Singapore | EIS AI Expansion | YA 2027–2028 | 400% deduction on AI spending |
What This Means for You
If you are a US business owner: The restoration of 100% bonus depreciation and the doubled Section 179 limit create the most favorable depreciation environment since 2022. Consider accelerating capital purchases and conducting cost segregation studies on recent real estate acquisitions.
If you are a UK business: The WDA main rate has now dropped to 14% (effective April 2026), making Full Expensing and AIA even more important. The new 40% FYA (effective since January 2026) provides additional relief for sole traders and partnerships.
If you are an Australian small business: The $20,000 instant write-off expires June 30, 2026 and will revert to just $1,000 unless extended. Prioritize eligible asset purchases before the deadline and stay under the per-item threshold where possible.
If you are a Singapore business: Take advantage of the 40% CIT rebate for YA 2026 (capped at S$30,000). Capital allowances under Section 19A remain the most efficient write-off option for plant and machinery (3-year or 1-year for automation). If you are investing in AI, plan qualifying expenditures for YA 2027–2028 to benefit from the 400% EIS deduction on up to S$50,000 per year.