One Big Beautiful Bill Act: Key Tax Insights for Businesses

Today's business landscape can often feel overwhelming, especially when new legislation introduces sweeping changes. The One Big Beautiful Bill Act is one such reformative measure, promising significant tax changes that build upon the 2017 Tax Cuts and Jobs Act. This guide is designed to break down the key takeaways for business owners navigating these complex updates, ensuring they can understand and adapt to the adjustments effectively.

Bonus Depreciation Returns

One of the major highlights is the return of bonus depreciation, allowing businesses to permanently expense 100% of qualified capital assets acquired from January 20, 2025. This particularly benefits companies investing in manufacturing buildings that are placed in service before 2031.

Reconsidering Interest Deductions

The business interest deduction limit based on EBITDA has returned, providing more generous deduction opportunities. Businesses will also receive new guidance regarding how capitalizations interact with these deductions, offering further financial flexibility.

R&D Expensing Reinstated

In a move to support innovation, domestic research costs are now fully deductible again. Companies can also accelerate the recovery of capitalized R&D expenses from 2022 to 2024, though it's important to note that foreign R&D costs must still be amortized.

Permanent QBI Deduction

The Act makes the 20% Qualified Business Income (QBI) deduction permanent, with expanded phase-in thresholds set at $75,000 for singles and $150,000 for joint filers. This change provides a more predictable financial outlook for qualifying business income.

Changes in Charitable Deduction Limits

A new corporate giving floor has been introduced at 1%, while individuals who itemize deductions will see a 0.5% AGI floor. These adjustments aim to streamline charitable contribution strategies within the corporate sector.

Impact on Business Deductions and Credits

On-site meal deductions provided by employers will see limitations starting in 2026, with specific exemptions for certain fishing businesses. Meanwhile, credits such as the Clean Electricity Production and Investment Credits are poised for phase-out or reduction.

Compliance and Strategy

The "One Big Beautiful Bill Act" brings extensive changes, from qualification criteria to deduction recalibrations. Proactive planning is critical. Reviewing your tax strategy with a professional can help mitigate surprises and leverage new opportunities under these rules. Business owners must ensure they comply with the latest regulations while optimizing their tax positions as strategically as possible under the evolving tax framework.