On July 4th, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law, an impactful development for the U.S. car wash industry. Chief among its provisions related to car wash stakeholders is the reinstatement of 100 percent bonus depreciation, a powerful tax incentive last in place from 2017 to 2022.
This policy, along with several other measures in the bill, is poised to stimulate activity in car wash mergers and acquisitions (M&A), sale-leaseback transactions, and new site development in the second half of 2025 and beyond.
Key OBBBA Provisions
100 percent bonus depreciation returns. Perhaps the most influential provision of the OBBBA is the reinstatement of 100 percent bonus depreciation for qualified property placed in service between January 19, 2025, and December 31, 2029. This allows investors and business owners to fully deduct the cost of eligible assets, such as wash tunnels, payment systems, HVAC, electrical upgrades, and in many cases, real estate, during the year those assets are placed into service.
The implications of this are profound. From a cash flow perspective, being able to write off the full value of major capital expenditures in the first year significantly improves return on investment (ROI). For developers and operators, this immediate expensing boosts internal rate of return (IRR) models, making car wash projects more attractive and financially viable. The provision also impacts real estate investors pursuing sale-leasebacks, where depreciation benefits can provide significant tax advantages without operational burden.
In addition, these incentives have far-reaching implications beyond one-time tax deductions. In many cases, they influence how and where capital is deployed. Bonus depreciation serves as a financial lever, empowering stakeholders to recycle capital, reinvest in growth, and justify acquisitions that may have otherwise been cost-prohibitive in a high-interest rate environment.
QBI deduction extended and expanded. In tandem with bonus depreciation, the extension of the QBI deduction through 2028 offers another layer of tax efficiency for car wash investors. Businesses structured as LLCs, S corporations, or partnerships can deduct up to 20 percent of qualified business income. Notably, this deduction applies after accounting for bonus depreciation, effectively stacking benefits and further reducing taxable income.
While the QBI deduction isn’t new, its extension and expansion signal ongoing federal support for small and mid-sized enterprises. For the car wash sector, which is dominated by entrepreneurs, family offices, and private equity-backed platforms, the deduction enhances investment appeal.
Owners and investors are strongly advised to consult tax professionals and cost segregation experts to fully capitalize on these incentives.
Market Outlook
Northmarq’s recent “Bonus Round for the Car Wash Sector? How Bonus Depreciation and Interest Rates Could Impact Deal Making After a Wild Start to 2025” article suggested that a combination of reinstated bonus depreciation and potential interest rate cuts could lead to a record-setting year for car wash deal volume.
While interest rates remain stubbornly high — the U.S. 10-Year Treasury has yet to sink below 4.0 percent in 2025 — the reinstatement of bonus depreciation alone should still provide a key catalyst to reignite market activity during the second half of the year.
M&A trends. Even though Whistle Express acquired 385 Take5 units from Driven Brands for $385 million, overall M&A volume remains modest. Car Wash Advisory reports only 14 M&A deals (417 units) to date this year, with the Whistle/Take5 deal accounting for 92 percent of that volume. That leaves just 32 units traded outside of the headline deal, far below the record-breaking 102 transactions and 521 units transacted in 2022 ― coincidentally, the last year that 100 percent bonus depreciation was in effect.
High interest rates continue to suppress deal flow, but bonus depreciation’s return should lift valuations and spark activity. Most deals this year have traded in the 7–11x EBITDA multiple range. With pressure on large operators to grow, valuations could climb, especially as tax incentives improve acquisition economics.
Development activity. 100 percent bonus depreciation also boosts the economics of new site development, but rising costs for land and equipment have led many operators to favor acquisitions over greenfield builds. While some chains maintain expansion plans, development pipelines are generally more conservative than in previous years.
Because of these cost pressures, M&A may become a more appealing route to growth, pushing acquisition demand and, by extension, asset pricing higher.
Sale-leaseback market supercharged. Of all the sectors impacted by the OBBBA, the sale-leaseback market may benefit the most. These transactions allow car wash operators to sell their real estate, lease it back, and retain operational control, while unlocking capital for reinvestment.
For real estate investors, bonus depreciation is a significant incentive, enabling them to claim upfront tax deductions without operational involvement. This has made car wash real estate one of the most sought-after net lease asset classes in recent years.
Since the bill’s passage, buyer demand has surged. Cap rates, which were hovering between 6.5 and 7.5 percent, have begun to compress. For the first time in years, high-quality tenants are drawing offers in the low 6.0 percent range or even below. And all tenants are benefiting as the overall cap rate spectrum is trending lower.
More than 70 percent of sale-leaseback transactions traditionally occur in the second half of the year, driven by tax planning. With the return of bonus depreciation, 2025 is poised to see accelerated second-half deal flow.
Final Thoughts
Whether 2025 becomes a record-setting year for car wash transactions remains to be seen, but the reinstatement of 100 percent bonus depreciation is a powerful step toward that possibility. Combined with the extended QBI deduction and strong fundamentals across the industry, the sector is once again positioned as one of the most attractive plays in tax-advantaged real estate and business investment.
Jim Ceresnak is a vice president based in Northmarq’s Charlotte office. Jim specializes in net lease car wash dispositions and acquisitions, as well as corporate sale leasebacks, retail net lease investments, and 1031 exchange advisory. He can be reached at jceresnak@northmarq.com.