The “Big Beautiful Bill”—officially known as the One Big Beautiful Bill Act (OBBBA)—was signed into law on July 4, 2025. It significantly enhances the tax benefits for demountable walls by making accelerated depreciation incentives permanent and increasing deduction limits.

 

1. Permanent 100% Bonus Depreciation 

Under prior law, bonus depreciation was phasing out and was set to reach 0% by 2027. 

• The OBBBA Change: The Act permanently reinstated 100% bonus depreciation for qualifying property placed in service on or after January 19, 2025.
• Impact on Walls: Because demountable walls are classified as tangible personal property (rather than structural components), businesses can now continue to deduct 100% of the cost in the first year without worrying about a phase-down schedule. 

 

2. Expanded Section 179 Limits 

The OBBBA dramatically increased the limits for immediate expensing under Section 179. 

• New Deduction Limit: The maximum deduction was increased to $2.5 million (up from approximately $1.25 million).
• Phase-out Threshold: The total equipment spending limit before the deduction begins to decrease was raised to $4 million.
• Application: Demountable walls qualify as “Section 179 property” because they are movable and reconfigurable furniture/fixtures. 

 

3. Qualified Production Property (QPP) Incentive

For businesses in manufacturing or production, the bill introduced a new 100% deduction for “Qualified Production Property”. 

• Expansion: This incentive applies to newly constructed nonresidential real property used for production activities.
• Strategy: While demountable walls already qualify for 100% bonus depreciation as personal property, the QPP incentive encourages the construction of the larger facilities where these walls are installed. 

 

4. Comparison Summary for 2026

Feature	Traditional Drywall	Demountable Walls (Under OBBBA)
Asset Class	39-year Real Property	7-year Personal Property
Depreciation	Slow (Straight Line)	100% First-Year (Bonus)
Sec. 179 Cap	Generally ineligible	$2.5 Million
Reusability	None (Destroyed if moved)	100% Reconfigurable

Note: The OBBBA also increased the SALT (State and Local Tax) deduction cap to $40,000, which may provide additional indirect tax relief for business owners in high-tax states. 

 

Tax Benefits for Demountable Walls

Demountable walls offer significant tax benefits primarily because they are classified by the IRS as tangible personal property (furniture and fixtures) rather than permanent structural components like traditional drywall. 

 

As of 2026, the key tax benefits for businesses include:

1. Accelerated Depreciation 

• Shorter Asset Life: Demountable walls typically follow a 7-year depreciation schedule under the Modified Accelerated Cost Recovery System (MACRS).
• Drywall Comparison: Traditional drywall is considered a permanent part of the building and must be depreciated over 39 years. This means demountable walls allow you to write off the full cost over 5.5 times faster. 

 

2. Section 179 Deduction

• First-Year Write-Off: Under Section 179, businesses can deduct the full purchase and installation cost of demountable walls in the year they are placed into service.
• 2026 Limits: For the 2026 tax year, the Section 179 deduction limit is approximately $1,250,000, with a phase-out threshold starting at several million dollars in total equipment spending. 

 

3. Bonus Depreciation

• Additional Savings: If your purchase exceeds the Section 179 limit, you may qualify for bonus depreciation.
• Phase-out Status: For 2026, the bonus depreciation rate is set at 20%. It is scheduled to be fully phased out by 2027 unless new legislation is passed. 

 

4. Eligibility Criteria

To qualify for these accelerated tax treatments, the walls must generally meet these IRS-recognized characteristics: 

• Removability: They must be capable of being removed without causing significant damage to the building structure.
• Non-Load Bearing: They cannot support any structural load of the building.
• Reuse Potential: They are designed to be reconfigured or moved as business needs change.
• Installation Timing: They are often installed after the building’s initial shell is completed, making them a tenant-specific improvement. 

 

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Disclaimer: Tax laws are subject to change and vary by jurisdiction. Always consult with a qualified tax professional or use resources like the IRS website to confirm current year limits and eligibility for your specific situation.