The One Big Beautiful Bill Act (OBBBA) introduces a wide range of business-focused tax provisions, many of which are permanent, creating new planning opportunities for business owners. Below are the most impactful tax changes from the legislation.
1. Section 199A: Qualified Business Income (QBI) Deduction
OBBBA makes the 20% QBI deduction permanent for pass-through entities and sole proprietors. It also expands phase-in thresholds for specified service businesses, from $50K to $75K (individuals) and $100K to $150K (joint filers), and establishes a minimum QBI deduction of $400 starting in 2025 for eligible participants.
2. Bonus Depreciation & Section 179 Expensing
Starting January 20, 2025, businesses can fully deduct 100% bonus depreciation on both new and used qualifying property. The act also increases the Section 179 expensing limit to $2.5 million (phase‑out begins at $4 million), with inflation indexing beginning in 2025.
3. Research & Experimentation (R&E) Expense Deduction
OBBBA restores the ability to immediately deduct domestic R&E costs under Section 174, and allows small businesses (under $31M in annual gross receipts) to accelerate previously incurred R&E deductions from 2022–2024.
4. Clean Energy and Green Tax Credits
Some Inflation Reduction Act incentives, including clean vehicle credits, alternative fueling infrastructure credits, and the Section 179D energy-efficient building deduction, are phased out or capped early, with various expiration dates. Businesses should assess how these changes may impact renewable energy strategies.
5. Opportunity Zones
The QOZ program becomes permanent, continuing its tax deferral and exclusion benefits. A new rural-friendly QOZ option offers a triple step-up in basis. These vehicles provide expanded opportunity for capital gains planning beginning in 2027.
6. International Tax Measures
OBBBA makes permanent major international tax provisions: FDII and GILTI deductions (with a reduced effective rate of 14%) and the minimum BEAT rate increase to 10.5%, effective in 2026.
7. Employer-Provided Benefits Credits
Permanent changes include:
- Employee student loan payment exclusion (max $5,250, indexed after 2026)
- Expanded employer child care credit: 40% of qualified expenses (50% for small employers), with inflation indexing
- Permanent paid family and medical leave credit, including premiums
8. Limits and Deductions
The legislation permanently extends the excess business loss limitation and the New Markets Tax Credit. It also revises the interest deduction cap by excluding depreciation, amortization, and depletion to support broader deductible limits.
9. Employee Retention Tax Credit (ERTC) Limitations
IRS refunds for ERTC claims filed after January 31, 2024, are restricted. Additionally, the IRS has six years to audit eligible claims.
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