The One Big Beautiful Bill Act (OBBBA) signed by President Trump on July 4, 2025, significantly impacts businesses by modifying and extending tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA). Strategic tax planning under the OBBBA can maximize savings and improve cash flow for businesses and their owners.
Key Areas of Impact for Businesses and Their Owners
Bonus Depreciation
The Bill restores permanently the 100% bonus depreciation initially allowed under the TCJA for “qualified property” acquired on or after January 20, 2025. Without the Bill, the bonus depreciation rates would have been 40% in 2025, 20% in 2026, and 0% in 2027 and beyond.
Qualified property includes:
- Tangible personal property with a recovery period of 20 years or less
- Certain qualified improvement property for real estate purposes
The Bill also allows new 100% bonus depreciation for “qualified production property” the construction of which begins after December 31, 2024, and which is placed in service before January 1, 2034. Qualified production property includes nonresidential real property used in manufacturing, production, or refining activities.
Section 179 Expense
OBBBA raises the Section 179 deduction limit to $2,500,000, with a new phaseout threshold of $4,000,000. This allows businesses—especially small and midsize companies—to immediately expense qualifying property without relying solely on bonus depreciation.
Many states that don’t allow bonus depreciation do allow Section 179, making this provision particularly valuable for state tax planning.
Section 199A Qualified Business Income (QBI) Deduction
The Bill makes permanent the special 20% Section 199A QBI deduction for pass-through businesses (partnerships, S corporations, sole proprietorships). Previously set to expire at the end of 2025, this deduction is now permanent.
Enhancements include:
- Increased phase-in ranges: $75,000 for single filers and $150,000 for joint filers (up from $50k/$100k), indexed for inflation after 2026
- A new minimum deduction of $400 if the aggregate QBI is at least $1,000, provided the taxpayer materially participates in the business
This provision benefits higher-income taxpayers in service businesses who may now qualify before the deduction phases out.
Business Interest Deduction Limitation (Section 163(j))
The OBBBA modifies how Adjusted Taxable Income (ATI) is calculated under Section 163(j). ATI will now be computed without regard to depreciation, depletion, and amortization, similar to the original TCJA method (which had expired in 2021).
This change allows for larger interest deductions, improving after-tax cash flow for many businesses.
Domestic Research and Experimental (R&E) Expenditures
The Bill restores immediate deductibility of domestic R&E expenses, reversing the TCJA’s five-year amortization requirement.
Key points:
- Applies to tax years beginning after December 31, 2024, and before January 1, 2030
- Small businesses may apply the rule retroactively to 2022 via amended returns
- Acceleration of remaining deductions allowed over 2025–2026
This supports innovation-focused businesses and startups investing in domestic research.
Form 1099 Reporting
Great news for companies working with independent contractors:
- Reporting threshold for Forms 1099-NEC and 1099-MISC increases from $600 to $2,000
- Threshold will be indexed for inflation starting in 2027
For third-party payment platforms (PayPal, Venmo), the law restores the prior threshold of $20,000 and 200 transactions, retroactive to 2022.
Qualified Small Business Stock (QSBS)
The OBBBA enhances gain exclusions for qualified small business stock:
- 50% gain exclusion if held for 3 years
- 75% gain exclusion if held for 4 years
- 100% gain exclusion if held for 5 years
Applies to QSBS issued after July 4, 2025—a big incentive for early-stage investors and entrepreneurs.
Excess Business Losses
While many changes favor business taxpayers, the Bill also makes permanent the provision that disallows excess business losses incurred by noncorporate taxpayers. This was previously set to expire after 2028.
What’s Next?
If you run an LLC, pass-through entity, or small business, now is the time to reassess your 2025 tax strategy. The OBBBA provides new deductions, expanded thresholds, and significant opportunities to reduce your tax burden.
Need Help Navigating the OBBBA?
Our expert tax advisors are here to help you understand how these changes apply to your specific business situation—from Section 179 planning to bonus depreciation strategies, QBI optimization, and compliance updates.
Contact us today to schedule a personalized OBBBA tax impact review and get ahead of the 2025 tax season.
