When significant legislation emerges, like the "One Big Beautiful Bill Act," it can feel overwhelming for business owners trying to decipher the changes and their implications. Building on the 2017 Tax Cuts and Jobs Act, this new Act introduces substantial tax reforms that businesses need to navigate. As your financial partners, we're here to help break down these changes so you can focus on what matters: running and growing your business.

Permanent Bonus Depreciation

One of the highlights of the Act is the return of bonus depreciation, allowing businesses to permanently expense 100% of qualified capital assets acquired from January 20, 2025. This includes manufacturing buildings placed in service before 2031, which could tremendously benefit capital-intensive industries, providing immediate tax relief and incentivizing more robust investment in expansion.

Enhancements in Interest Deduction

The Business Interest Deduction sees an expansion by returning to the EBITDA-based limit, allowing for larger deductions. This change is coupled with new guidance on capitalization interactions, giving businesses more room to maneuver their financial strategies effectively.

R&D and QBI Deduction Adjustments

Research and development efforts receive a boost as R&D expensing is reinstated, making all domestic research costs fully deductible. Additionally, the accelerated recovery of 2022–2024 capitalized R&D expenses is reinstated, but bear in mind that foreign R&D costs still need to be amortized.

The Qualified Business Income (QBI) Deduction is now a permanent fixture. This means a 20% deduction is retained, with phase-in thresholds of up to $75,000 for singles and $150,000 for joint filers, providing continued support for qualifying small businesses.

Updates on Charitable and Meal Deductions

New rules introduce a 1% floor for corporate giving and a 0.5% AGI floor for individuals when itemizing deductions. Businesses will also see limited deductions for employer-provided meals starting in 2026, with specific exemptions for certain fishing businesses.

Other Noteworthy Changes

The Moving Expense Exclusion has been permanently repealed, except for active-duty military personnel. For those involved with REITs, the Act raises the limit on taxable REIT subsidiary holdings from 20% to 25% beginning in 2026.

ERTC Enforcement sees an expansion in IRS authority to manage erroneous claims, and businesses must stay compliant with these enhanced regulations.

Meanwhile, the Act also adjusts the Qualified Small Business Stock (QSB) Updates to a tiered gain exclusion schedule, along with a raised $15M per-issuer cap and higher $75M gross assets threshold for stock issued after July 4, 2025.

Energy credits are set to decrease, phasing out the Clean Electricity Production and Investment Credits, aligning with broader energy policy shifts.

Strategic Tax Planning is Key

Although the One Big Beautiful Bill Act brings about sweeping changes, with proactive tax planning, businesses can minimize surprises. We recommend sitting down with your tax professional to review your strategy, ensuring compliance and optimization under these new rules.

These legislative changes provide both opportunities and challenges. By staying informed and proactive, your business can continue to thrive amidst this evolving landscape.