The ever-shifting landscape of federal legislation can feel overwhelming, especially when it comes to understanding how new laws impact your business. The "One Big Beautiful Bill Act" introduces significant tax reforms, building on the foundation of the 2017 Tax Cuts and Jobs Act. In this post, we aim to simplify these changes, making it easier for business owners to navigate what's new and how it affects them.
Bonus Depreciation Returns
Businesses can now permanently expense 100% of qualified capital assets acquired from January 20, 2025. This includes manufacturing buildings placed in service before 2031, offering an opportunity for substantial tax savings.
Business Interest Deduction Expansion
The return of the EBITDA-based limit allows for larger deductions. Additionally, new guidance on capitalization interactions provides clarity for businesses seeking to maximize their deductible amounts.
R&D Expensing Reinstated
Domestic research costs are now fully deductible, and businesses can benefit from accelerated recovery of 2022–2024 capitalized R&D costs. However, it's important to note that foreign R&D expenses must still be amortized.
Qualified Business Income (QBI) Deduction
The 20% QBI deduction is now a permanent fixture, with expanded phase-ins up to $75,000 for single filers and $150,000 for joint filers. This change makes it more accessible for businesses to take advantage of this deduction.
Charitable Deduction Limits & Meal Deduction Changes
New charitable deduction floors have been introduced, with a 1% floor for corporate giving and a 0.5% AGI floor for individuals itemizing deductions. Additionally, on-site employer-provided meal deductions will be limited starting in 2026, except for certain fishing businesses.
Moving Expense Repeal & REIT Subsidiary Changes
Moving expense exclusions are now permanently removed, except for active-duty military personnel. Meanwhile, the limit on taxable REIT subsidiary holdings will increase from 20% to 25% in 2026, providing more flexibility.
Qualified Small Business Stock (QSB) Updates
A new tiered gain exclusion schedule has been introduced, with a higher $15M per-issuer cap and an increased $75M gross assets threshold for QSB stock issued after July 4, 2025.
ERTC Enforcement Expansion & Disaster Loss Relief
The IRS now has increased authority and an extended statute of limitations for erroneous ERTC claims. Also, the TCJA casualty loss deduction rules are permanent, and state-declared disaster losses now qualify for relief.
Opportunity Zone Updates & Excise Tax on Remittances
Enhancements to OZ definitions, rural incentives, new reporting rules, and 10-year rolling designations will start in 2027. A new 1% tax on certain cash-based transfers abroad has also been introduced, while transfers by bank and card remain exempt.
Energy Credit Reductions
The phase-out or elimination of energy credits, including those for Clean Electricity Production and Investment, may impact planning in the energy sector.
While the One Big Beautiful Bill Act introduces sweeping changes, proactive planning can help mitigate surprises. We encourage you to review your tax strategy with a professional to ensure compliance and optimization under the new rules.
