Understanding Tax Implications on Fiber Optic Networks in Telecom Industry
The One Big Beautiful Bill Act (OBBBA) signed by President Donald Trump on July 4, 2025, brought significant changes to tax policies affecting broadband grants and capital investments in the telecom industry. Bonus depreciation, a major highlight of the Act, now provides a permanent 100% deduction rate for eligible assets like fiber optic networks.
While companies like AT&T are optimistic about the potential tax benefits, the eligibility for bonus depreciation depends on the accounting methods followed. Under the Modified Accelerated Cost Recovery System (MACRS), assets with a recovery period of 20 years or less qualify for bonus depreciation. Despite fiber optic networks’ long economic life, the recovery period determines eligibility, not the asset’s class life.
Telecom companies must carefully consider their accounting and depreciation methods to maximize tax advantages for their fiber projects. It is crucial to seek advice from legal and financial professionals due to the intricate tax treatment of capital assets in the telecom sector.
