- November 6, 2025
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Rivero, Gordimer & Company
By Mike Helton, CPA and Alicia Holloway, CPA
The “One Big Beautiful Bill” (H.R. 1) brought sweeping changes to the U.S. tax code when it was signed on July 4, 2025. For rent-to-own (RTO) dealers, the new rules reshape how rental units and Capex are depreciated, how growth is funded, and how compensation is planned. The summary below explains what changed, why it matters, and practical ways to apply the updates before year-end.
Why this matters for RTO
RTO is both capital-intensive and cash-intensive. Inventory turns quickly, expansion is often debt-assisted, and performance is managed by cash flow—not only GAAP profit. Changes to immediate expensing, interest deductions, and payroll-related provisions flow directly to margins, liquidity, and valuation.
Faster write-offs mean more cash today
Bonus depreciation: immediate relief—used wisely
Qualifying assets placed in service after January 19, 2025, are eligible for permanent 100% bonus depreciation, allowing a full year-one expense. Examples include store fixtures, equipment, delivery vehicles, and certain building improvements. For RTO entities this effectively enables “buy and expense” strengthening near-term liquidity.
Bonus depreciation is not universally optimal. Highly leveraged periods or a preference for steadier taxable income may warrant electing out to avoid volatility and potential recapture as assets turn.
Section 179: targeted control
The bill raises Section 179 limits: up to $2.5 million of qualifying purchases may be expensed, with a phase-out beginning after $4 million in total acquisitions. Section 179 is particularly useful for items outside bonus eligibility, such as certain nonresidential improvements (roofs, HVAC, security).
How to put this to work: Align capital purchases with store openings, remodels, and refurb cycles, then run a side-by-side comparison—full bonus vs. Section 179 vs. electing out—to capture savings without creating volatile taxable income. Don’t forget to discuss a Cost Segregation study to benefit from these new rules for commercial property acquisitions.
Financing: interest deduction gets easier (mostly)
The §163(j) business-interest limit is once again calculated on EBITDA rather than EBIT. This shift generally expands deductible interest for debt-intensive dealers—an advantage for growth financed through borrowing.
Because of the add-back for Depreciation to compute the “Adjusted Taxable Income” base, we expect many more larger RTO dealers to benefit from this rule change who may have previously had interest expense limited.
Pass-through owners: QBI made permanent
The 20% Qualified Business Income (QBI) deduction is now permanent, with expanded phase-ins and a small-business minimum deduction for eligible owners. Entity choice and reasonable compensation remain pivotal. As profits scale, S-corporation and partnership structure should be revisited to optimize after-tax cash flow.
Payroll & people: new overtime deduction
From 2025–2028, employees may deduct up to $12,500 of “Qualified overtime pay” ($25,000 for married filing jointly). This provision functions as a deduction—overtime is not tax-free—so payroll and state taxes continue to apply. Dealers relying on weekend and holiday shifts may see recruitment and retention benefits, and employees will likely raise questions at tax time.
For this purpose, “Qualified” OT is the premium portion (1/2 portion) of the time + ½ pay rate.
Owners’ personal planning (that touches the business)
Beginning in 2025, the standard deduction increases to $31,500 (MFJ), $15,750 (single), and $23,625 (HOH), influencing estimated-tax planning for pass-through owners. The estate and gift exclusion also rises, opening planning opportunities for succession, store transfers, and family wealth strategies. The bill introduces “TRUMP Accounts,” an IRA-style children’s savings plan allowing up to $5,000 in after-tax contributions annually, plus a one-time $1,000 federal seed deposit for certain 2025–2028 births—potentially useful within broader compensation and family planning.
Don’t forget the guardrails
- The Excess Business Loss limitation is now permanent for non-corporate taxpayers, limiting the amount of business loss that offsets non-business income in a single year—critical when large first-year bonus depreciation is in play.
- Pass-through entity (PTE) tax elections in many states continue to help navigate state and local taxes (SALT) limits and should be coordinated with QBI and estimated-tax strategies, even with the expanded limits for SALT deductions at the Federal level.
A simple year-end checklist for RTO dealers
- Run a 2025 projection in two versions—taking bonus depreciation vs. elect-out—then select the path balancing cash savings and predictability.
- Tighten books now: reconcile cash and POS balances to books daily and clarify capitalization vs. expensing policies before the holiday rush.
- Recalculate the §163(j) limit using EBITDA and build a 2026 view; adjust debt levels or refinancing cadence if warranted.
- Brief teams on the overtime deduction (a reduction to taxable income, not tax-free pay).
- For upcoming credit lines, acquisitions, or exits, review financials to higher standards to improve bankability and valuation.
The bottom line for RTO owners
This is a planning moment, not a reaction moment. Year-end projections, daily balance-sheet reconciliation, and a deliberate choice to use or opt out of bonus depreciation can stabilize results. Leading RTO dealers pair strong customer relationships with disciplined financial management; a proactive CPA partnership and thoughtful application of these provisions help protect margins, fund growth, and prepare for what comes next.
Want a deeper dive?
RGCO’s Mike Helton, CPA, and Alicia Holloway, CPA recently joined The RTO Show Podcast to translate the new law into plain-English for RTO dealers. They unpack EBITDA vs. free cash flow, when bonus depreciation helps (and when it hurts), interest limitations, inventory discipline, and the metrics buyers prioritize.
Listen on Spotify:
Watch on YouTube:
Serving the RTO community
Rivero, Gordimer & Company, P.A. (RGCO) serves franchisors, franchisees, and independents representing hundreds of RTO storefronts. With nearly two decades in the space, the firm has deep knowledge of the unique needs of RTO—from start-up and financing through industry-specific tax rules to succession, merger, sale, and valuation.
The team remains current on industry developments and advises on tax and accounting, business valuations, mergers & acquisitions (M&A), and ongoing consulting. RGCO is very active in the RTO industry including serving as an associate member of the Association of Progressive Rental Organizations (APRO), an approved vendor for the TRIB Group (The Rental Industry Buying Group), and a vendor member of the Florida Rental Dealers Association (FRDA).
Contact a member of our RTO Committee to us to discuss how the One Big Beautiful Bill could impact your stores and strategy.
