Details of Public Law 119-21, section 70306 , One Big Beautiful Bill Act

The provision increases the maximum amount a taxpayer may expense under IRC section 179 from $1,000,000 to $2,500,000 and increases the phaseout threshold amount from $2,500,000 to $4,000,000. The previous amounts were set under the Tax Cuts and Jobs Act (Public Law 115-97, section 13101). The $2,500,000 expense and $4,000,000 phaseout threshold amounts are indexed for inflation for taxable years beginning after 2025.

California conforms, under the PITL and the CTL, to the IRC section 179 expensing provisions, as of the specified date of January 1, 2025, with modifications, but does not conform to the federal maximum expense and phaseout threshold amounts. As a result, the federal modifications to these amounts are not applicable to California.

In addition, the CTL allows “additional first-year depreciation” of up to $10,000 per year. However, the CTL allows taxpayers to elect the IRC section 179 expensing deduction in lieu of “additional first-year depreciation.” Property qualifying for “additional first-year depreciation” is similar to property qualifying under IRC section 179. However, a corporation is allowed only one or the other of the expensing deductions, not both.