With the recent passage of the federal tax reform bill — the “One Big Beautiful Bill Act”— here is an overview of key updates that could affect your business. Many of the changes build upon the 2017 Tax Cuts and Jobs Act, but there are also new provisions specifically for business owners. Here’s a look at the most important updates to keep in mind:
Taxation Highlights
- Bonus depreciation restored: Businesses can immediately and permanently expense 100% of qualified capital assets acquired starting January 20, 2025. This also now includes manufacturing buildings placed in service before January 1, 2031.
- Business interest deduction improved: The original TCJA EBITDA-based limit is back starting in 2025, allowing for larger interest deductions. The bill also provides guidance on how this interacts with other capitalization rules.
- R&D expensing reinstated: Domestic research costs can once again be fully expensed, and businesses can accelerate the recovery of previously capitalized R&D costs from 2022 to 2024. However, foreign R&D must still be amortized over 15 years.
- Qualified Business Income deduction made permanent: The 20% qualified business income deduction is here to stay, with expanded income phase-ins of $75,000 (single) and $150,000 (joint).
- Charitable deductions capped: A 1% floor applies to corporate charitable deductions, while individual itemizers can only deduct the portion of their qualified charitable contributions that exceeds 0.5% of their adjusted gross income.
- Employer-provided meals: A 2026 rule disallows some on-site meal deductions, but some fishing-related businesses will now be exempt.
- Moving expenses: The exclusion and deduction are now permanently repealed, except for active-duty military personnel.
- REIT rule change: The limit on taxable REIT subsidiary holdings rises from 20% to 25% of total REIT assets starting in 2026.
Other Key Provisions
- Qualified Small Business Stock: For QSB stock issued on or after July 4, 2025, the gain exclusion is now tiered — 50% after three years, 75% after four years, and 100% after five years. The per-issuer cap rises to $15 million, and the gross assets test increases to $75 million.
- Employee Retention Tax Credit enforcement: The IRS has expanded its authority to deny or reclaim erroneous ERTC claims, particularly for the third and fourth quarters of 2021. The statute of limitations extends to six years, while the limitation period for 2020 and the first and second quarters of 2021 remains at three years.
- Disaster relief: TCJA rules for casualty loss deductions are made permanent. Losses from state-declared disasters also now qualify.
- Opportunity Zones: The OZ program has been updated with new definitions, rural incentives, rolling 10-year designations (beginning in 2027), and new IRS reporting rules.
- Excise tax on remittances: A new 1% federal excise tax applies to some cash-based transfers from the U.S. to other countries, with exceptions for bank-funded or card-based transactions.
- Energy credits phased out or eliminated: The Act eliminates or phases out various energy tax credits, including the Clean Electricity Production Credit (Section 45Y) and the Clean Electricity Investment Credit (Section 48E).
There’s a lot to unpack here, and the impact will vary depending on your business structure and operations.