What the One Big Beautiful Bill Act Means for Your Business
Eric Chaimowitz July 23, 2025
The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, brings sweeping changes to the U.S. tax code, especially for businesses of all sizes. Here’s a summary of important business tax provisions and what they could mean for you.
Qualified Business Income Deduction (Section 199A) – Enhanced and Made Permanent
- What’s New: The popular 20% deduction for qualified business income (QBI) from pass-through businesses (like partnerships, S corporations, and sole proprietorships) is now permanent. The income thresholds for phasing in certain limits have increased to $75,000 for single filers and $150,000 for joint filers. There’s also a new minimum deduction of $400 for active business income, adjusted for inflation.
- What This Means: More business owners can benefit from the deduction, and the rules are more generous for those with moderate incomes. The deduction is here to stay, so you can plan with more certainty.
Full Expensing for Business Property (Bonus Depreciation) – Now Permanent
- What’s New: Businesses can immediately deduct 100% of the cost of most new and used business equipment and certain property, with no expiration date.
- What This Means: If you buy equipment, machinery, or other qualifying property, you can write off the entire cost in the year you place it in service, improving cash flow and reducing your tax bill.
Section 179 Expensing – Higher Limits
- What’s New: The maximum amount you can expense under Section 179 has increased to $2.5 million per year, with the phaseout starting at $4 million. These amounts are indexed for inflation.
- What This Means: Small and medium-sized businesses can deduct more of their equipment and property purchases right away, rather than depreciating them over several years.
Business Interest Deduction – More Generous Rules
- What’s New: In the One Big Beautiful Bill Act, the rules for deducting business interest have been relaxed. The calculation now allows for more interest to be deducted, as the “EBITDA add-back” (earnings before interest, taxes, depreciation, and amortization) is restored permanently.
- What This Means: Businesses with loans or other interest expenses can generally deduct more of their interest, making it easier to finance growth. The credit is reduced for taxpayers with MAGI above $150,000 and is phased out over a $40,000 range; this phase out range is increased for inflation.
Research and Development (R&D) Expenses – Immediate Deduction for Domestic R&D
- What’s New: Businesses can now fully deduct domestic R&D expenses in the year they are incurred, rather than spreading the deduction over five years. (Foreign R&D must still be deducted over 15 years.)
- What This Means: Companies investing in innovation and product development in the U.S. get a bigger, faster tax benefit.
Other Notable Business Provisions in the One Big Beautiful Bill Act
- Opportunity Zones: The program is renewed and enhanced, with new reporting requirements and expanded benefits for rural areas.
- Low-Income Housing and New Markets Tax Credits: Both credits are made permanent, supporting investment in affordable housing and economically distressed communities.
- Advanced Manufacturing Credit: The credit for investing in advanced manufacturing is increased to 35% of qualified investment.
What Should Business Owners Do Now?
- Review Your Tax Strategy: With many provisions now permanent, it’s a good time to revisit your tax planning, especially for equipment purchases, R&D, and employee benefits.
- Consider Timing: Some deductions and credits are temporary or have new phaseouts, so timing your investments and expenses can make a big difference.
- Consult Your Tax Advisor: The new law is complex, and the best strategies will depend on your specific situation.
The One Big Beautiful Bill Act brings stability and new opportunities for businesses, with enhanced deductions, credits, and incentives for investment and growth. While some clean energy and other credits are ending, most businesses will benefit from lower taxes and more generous deductions. As always, careful planning and professional advice are key to making the most of these changes.
