There is good news to report regarding fire sprinkler incentives in the legislation that was signed into law on Friday, July 4, 2025.
Legislation that included fire sprinkler incentives was signed into law on July 4th.
As part of the 2017 Tax Cuts and Jobs Act (TCJA) NFSA had two major victories:
Fire sprinklers were made eligible as a 179 property. This change allowed small businesses to fully expense up to $1.3 million for the installation of fire sprinklers. This allowed any small business to immediately expense the full cost of a sprinkler retrofit. This change was made permanent by Congress and did not sunset unlike other tax provisions.
Fire sprinklers were made eligible as a Qualified Improvement Property (QIP). QIP is essentially any retrofit item on the interior of a nonresidential building with the exclusion of structural enhancements. QIP reduced the depreciation schedule in commercial structures from 39 years to 15 years. In addition, QIP was eligible for bonus depreciation, which allowed property owners to depreciate the investment in fire sprinklers even more quickly.
Congress allowed property owners to depreciate fire sprinkler retrofits 100% for the tax years 2018-2022. Starting in 2023, the schedule decreases to 80% and goes down 20% every tax year until there is no bonus depreciation in 2027. After that, fire sprinklers would be depreciated over a 15-year time horizon. There is no cap on the amount a property owner can depreciate using QIP and bonus depreciation.
There are two important changes in the House and Senate versions of the Big Beautiful Bill that will greatly benefit the fire sprinkler industry:
They more than doubled the size of the 179 deductions. Small and medium-sized businesses will be able to fully expense up to $2.5 million instead of the current maximum of $1.3 million. This could allow a property owner to retrofit almost any type and size occupancy and fully deduct the cost.
The bill reinstates 100% bonus depreciation for QIP properties for the tax years 2025-2030. The bill also reinstates bonus depreciation but does not sunset the provision, so this change is now permanent. As before there is no limit on the amount a property owner can now fully expense.
A big thank you goes to NFSA Vice President of Advocacy and Outreach Vickie Pritchett and her team, along with Andy Quinn and his team at McAlister & Quinn in Washington, D.C. Vickie, Andy, and our Congressional Fire Service Institute partners have been in daily contact this past month, and their work paid off with these key provisions.
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