Bonus depreciation continues to phase down under current tax law, dropping to 40% in 2026 after several years at 100%. For retail and CPG companies, this shift materially changes how capital investments translate into near-term tax savings. Historically, a business could deduct the full cost of a store buildout, warehouse automation project, or manufacturing asset in the year it was placed in service. That benefit is now significantly reduced.

The practical impact is a meaningful timing difference in tax expense. Consider a $1 million warehouse automation investment: under current law, the immediate deduction is limited to $400,000, with the remaining $600,000 depreciated over the asset’s useful life. At a 25% effective tax rate, that difference translates to roughly $150,000 in delayed tax savings compared to what was available just a few years ago.

Finance teams should evaluate whether it makes sense to accelerate planned capital expenditures where feasible, and consider combining bonus depreciation with Section 179 expensing to maximize available deductions. However, Section 179 comes with its own limitations and phase-out thresholds for larger investments, so careful modeling is required before assuming full deductibility.

It is equally important to align CapEx timing with broader financial strategy. Accelerating deductions improves short-term cash flow, but it can create tension with EBITDA targets or investor-reported earnings. Finance leaders should model both the tax and financial reporting impact before making final timing decisions.

Bottom Line: CapEx decisions now carry greater tax and cash flow consequences. The timing of when you place assets in service matters more than it has in years.

Transfer pricing has become an increasingly important compliance consideration for retail and CPG companies that source goods through related-party entities overseas. The IRS requires that transactions between related parties be conducted at arm’s length — meaning they must reflect pricing consistent with what independent parties would negotiate in a comparable transaction.

Transfer pricing risk can run in both directions. Some companies underprice imports from related-party suppliers to reduce the dutiable value of goods, while others overprice them to shift profits out of higher-tax jurisdictions. Both scenarios can attract IRS scrutiny, and penalties for substantial transfer pricing misstatements can reach 20% or more of the underpayment.

As a practical example, a U.S.-based brand importing finished goods from a related factory in Asia must be able to justify its intercompany pricing relative to comparable arm’s-length transactions. If the IRS determines that the pricing arrangement does not reflect market rates — either through a formal audit or under a penalty protection review — it can reallocate taxable income between entities and assess substantial penalties.

The most effective way to mitigate this risk is through contemporaneous documentation prepared at or near the time the transactions occur, benchmarking intercompany prices against available industry comparables, and maintaining consistent gross margin profiles across related entities. Waiting until an audit begins to build the transfer pricing file is a costly mistake that is entirely avoidable.

Bottom Line: Transfer pricing is no longer just a concern for large multinationals. Growing brands with global supply chains need to address it proactively — before the IRS does.