If you are among the dealers putting off a big, beautiful facility improvement project, procrastinate no more. Included in H.R. 1, better known as the One Big Beautiful Bill Act, is a provision that removes a limitation on how much interest can be deducted for such projects.
“They changed the computation so now dealers can take both depreciation and interest deductions,” Ken Rosenfield, founder and partner at accounting firm Rosenfield and Co., which has offices in New York, New Jersey and Florida, tells WardsAuto.
Some Big Beautiful Dealer-Friendly Aspects
Passed on July 3 and signed into law by President Donald Trump on July 4, 2025, the OBBBA contains a number of provisions that directly benefit dealers. Other aspects may indirectly benefit dealers by boosting vehicle demand.
The reinstatement of the 100% deduction for bonus depreciation of qualified assets for all property acquired beginning Jan. 20, 2025, is the most important provision for dealers, says Rosenfield. Previously the rate was 40%.
Many dealers pay cash for facility improvements, but now they can borrow money to make the improvement and the interest will be deductible, he says.
Other dealership expenses, such as floorplan interest and loaner fleet depreciation, are also now 100% deductible, says Rosenfield.
Because there is still a form of interest expense limitation, dealers should look at a sale/leaseback transaction rather than traditional financing to take advantage of the full interest deduction, he says.
In the buy-sell area, if a dealer is acquiring a franchise, the ability to deduct 100% of both interest and depreciation will influence how to allocate the price of an acquisition among goodwill, assets and equipment, says Rosenfield.
Time to Start Gifting
Another feature of the OBBBA that may interest dealers is it increases the estate tax exemption to $15 million for an individual and $30 million for couples. Previously, the exemptions were $13.61 million and $27.22 million, respectively. Starting in 2027, the exemption will be indexed for inflation using 2025 as the base year.
“This is a good time to start gifting,” says Rosenfield. “With the exemption going up, you can give more away to successors or charities.”
Provisions Affecting Demand
The OBBBA also gives benefits to consumers. Up to $10,000 annually in auto loan interest for vehicles assembled in the U.S. is deductible starting this year through 2028, although most consumers – except for six-figure luxury car buyers – likely will see a lower amount.
“The average American will be able to deduct their car interest now where they couldn’t before,” says Rosenfield.
One provision may reduce demand, however:elimination of the purchase and lease tax incentives for electric vehicles. It ends Sept. 30, 2025.
Dealers currently have more than 114 days’ supply of EVs.
“So, dealers hope people take advantage of the credits while they still last,” says Rosenfield. “But what is going to be the long-term impact on EV demand is the big question.”
