Key Business Tax Provisions in the One Big Beautiful Bill Act (OBBBA)

Business Tax Provisions

·         QBI deduction: The qualified business income (QBI) deduction is made permanent and the deductible amount for each qualified business would remain at 20%.

·         Bonus depreciation: 100% expensing (bonus depreciation) for qualified property is restored for property placed in service after Jan. 19, 2025.

·         Sec. 179 expensing: The maximum amount a business may expense for qualifying expenses is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.

·         R&E expenditures: Immediate deduction of domestic research or experimental expenses paid or incurred in 2025 is allowed. However, research or experimental expenses attributable to research that is conducted outside the United States will continue to be capitalized and amortized over 15 years. 

·         Excess business loss permanency: The excess business loss limitation is made permanent, and the existing treatment of loss carryforwards is maintained.

·         Business interest deduction: The interest expense limitation is calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), rather than earnings before interest and taxes (EBIT).

·         FDII and GILTI: Beginning in 2026, the deduction percentage is reduced to 33.34% for foreign-derived intangible income (FDII) and 40% for global intangible low-taxed income (GILTI).

·         BEAT: The base-erosion and anti-abuse tax (BEAT) rate is increased from 10% to 10.5%.

·         Third-party network transaction reporting threshold: Form 1099-K, Payment Card and Third Party Network Transactions, reporting reverts back to previous rules where reporting is required if transactions exceed $20,000 and the aggregate number of transactions exceeds 200.

·         Form 1099 reporting threshold: The information reporting threshold for payments for services increases to $2,000 in a calendar year (up from $600) in 2026, and the threshold amount will be indexed annually for inflation starting in 2027.

·         Renewed Opportunity Zones: Opportunity zones provisions are made permanent, but with several changes, including narrowing the definition of “low-income community.” The changes will generally take effect in 2027.

·         Clean energy and IRS credits: Several clean energy credits from the Inflation Reduction Act (IRA) are terminated.

How can you prepare?

A phased approach to planning will align with the timing and impact of this legislative development. This approach allows us to support you with timely strategies tailored to each stage of implementation:

• Short-term planning will focus on immediate actions and compliance considerations for tax provisions already in effect or taking effect soon.

• Mid-term planning will address transitional provisions and opportunities that emerge over the next 12–18 months.

• Long-term planning will help position you for sustained success by anticipating future changes and aligning your financial goals with the broader tax policy environment.

We’ll continue to monitor developments closely and provide updates and guidance as new details become available. Our goal is to ensure you’re informed, prepared, and supported — every step of the way.

We’re here to help

Our team is available to discuss how these provisions may impact your personal or business tax situation and to help you plan accordingly.

Please don’t hesitate to contact us with any questions or to schedule a consultation.