The recently passed legislation is wide-reaching, and this article highlights just some of the key changes that may affect your business.

Signed into law on July 4, 2025, the One Big Beautiful Bill (OBBB) introduces sweeping changes that could reshape tax planning, deductions, and reporting for business owners. From startups to established enterprises, these changes may significantly affect your future tax planning.

Here are several key updates for business taxpayers:

100% Bonus Depreciation Made Permanent

The legislation restores and permanently extends 100% bonus depreciation, allowing taxpayers to deduct the full cost of qualified property in the year it is placed in service, with no future phase-downs. The provision applies to property acquired and placed in service after January 19, 2025.

New Deduction for Qualified Production Property (QPP)

The legislation introduces a new elective 100% bonus depreciation regime for certain nonresidential real property used in manufacturing, refining, or production activities. Property must be newly constructed, with construction beginning after January 19, 2025, and before January 1, 2029, and placed in service no later than December 31, 2030.

While this is a significant opportunity, it comes with strict eligibility criteria, special recapture rules, and timing requirements. To ensure proper classification and maximize the benefit, taxpayers should consult with a tax advisor or cost segregation specialist early in the planning or construction process.

Increased Section 179 Expensing Limits

Effective for property placed in service after 2024, the Section 179 expensing limit increases to $2.5 million, with the phaseout threshold beginning at $4 million in total qualifying purchases. Both limits are indexed annually for inflation.

Immediate Deduction for Domestic Research and Experimental Costs

The legislation repeals the mandatory five-year amortization requirement for domestic research and experimental (R&E) expenditures. Taxpayers may once again fully deduct domestic research and experimental (R&E) expenditures in the year incurred.

Additionally, the legislation provides taxpayers with timing options for claiming deductions on previously capitalized and unamortized domestic R&E costs. Eligible taxpayer may amend prior returns, and all taxpayers can chose to deduct the costs in 2025, or spread deductions over 2025 and 2026.

Interest Expense Deduction Under Section 163(j) Expanded

Beginning in 2025, the limitation on business interest expense under §163(j) is calculated using earnings before interest, taxes, depreciation, and amortization (EBITDA), rather than EBIT. This change reinstates the more favorable pre-2022 standard for computing the 30% limitation, retroactively allowing larger deductions for taxpayers with significant depreciation and amortization.

Qualified Business Income (QBI) Deduction Made Permanent

The Section 199A deduction for qualified business income (QBI) is made permanent. The phaseout thresholds for taxpayers in specified service trades or businesses (SSTBs) and those subject to the wage/capital tests are increased, broadening eligibility.

The legislation also introduces a provision allowing taxpayers with at least $1,000 in aggregate qualified business income (QBI) to claim a minimum deduction of $400.

Higher Reporting Thresholds for 1099s

Beginning with payments made after December 31, 2025, the reporting threshold for Forms 1099-NEC and 1099-MISC increases from $600 to $2,000. This will be indexed for inflation annually after 2026. Separately, the Form 1099-K threshold reverts to the $20,000 and 200 transactions standard.

Expanded Exclusion for Qualified Small Business Stock (QSBS)

For small business investors, gains from the sale of QSBS acquired after July 4, 2025, may now be partially excluded even if the full five-year holding period is not met. Taxpayers can qualify for a 50% exclusion after three years and a 75% exclusion after four years.

The exclusion cap is increased from $10 million to $15 million, and the gross asset limit at the time of stock issuance is raised from $50 million to $75 million, expanding eligibility for more businesses and investors.

Opportunity Zones Program Extended

The legislation makes permanent the key tax benefits associated with investments in Qualified Opportunity Funds (QOFs), including deferral of capital gains and potential exclusion of post-investment appreciation. There are no changes to the rules that apply to existing QOF investments.

For new investments made after 2026, taxpayers must recognize gain five years after the date of the investment but will get a 10% increase in basis. The law retains the full step-up in basis to fair market value for QOF property held for 10 years, but it introduces a new cap: the step-up is capped at the property’s fair market value as of 30 years from the investment date.

Next Steps for Business Owners

Business taxpayers should assess the impact of these changes on their 2025 planning. Reach out to discuss how these updates align with your business goals and tax strategy.