Nearly eight years after the TCJA rewrote the corporate tax playbook, the One Big Beautiful Bill (OBBB) Act has arrived to finalize and extend many of those changes. With its passage in July 2025, business taxpayers now face a new set of rules—some familiar, others entirely new. This post highlights the most impactful provisions and what they mean for your business.
Key Deductions and Limitations
Bonus Depreciation
Bonus depreciation allows businesses to immediately deduct the cost of qualifying new or used property in the year it’s placed in service. Under the new law, 100% bonus depreciation is restored and made permanent for qualified property acquired and placed in service after January 19, 2025.
Additionally, bonus depreciation now applies to “qualified production property” constructed between January 19, 2025, and January 1, 2029, and placed in service between July 1, 2024, and January 1, 2031.
Section 179 Expensing
Section 179 allows businesses to immediately deduct the full cost of qualifying property, up to an annual limit. The OBBB Act increases the limit to $2.5 million, with a phase-out beginning at $4 million. These apply to property placed in service in tax years starting after December 31, 2024, and will be indexed for inflation beginning in 2026.
R&E Expensing
Taxpayers can now immediately expense domestic research and experimental (R&E) costs for tax years beginning after December 31, 2024. The Act also provides retroactive relief for costs capitalized since 2022, when the amortization requirement first took effect.
Small businesses with average gross receipts of $31 million or less may file amended returns to fully deduct these costs. All taxpayers may instead elect to accelerate unamortized costs on their 2025 return or spread them across 2025 and 2026. Note: foreign R&E costs must still be amortized over 15 years.
Interest Deduction Limitation
The limitation on business interest deductions increases to 30% of adjusted taxable income calculated before depreciation and amortization (for tax years beginning after December 31, 2024). Previously, depreciation and amortization were excluded from this calculation.
Key Entity Considerations
QBI Deduction Made Permanent
The popular 20% deduction for qualified business income (QBI)—which was scheduled to expire at the end of 2025—is now permanent, with income thresholds indexed for inflation.
The phase-in range for limitation thresholds has been expanded to $75,000 for individuals and $150,000 for joint filers.
Additionally, a new minimum deduction of $400 is available to materially participating taxpayers with at least $1,000 in QBI.
Pass-Through Entity Tax (PTET) Reconsiderations
The state and local tax (SALT) deduction cap increased from $10,000 to $40,000 ($20,000 for married filing separately), which may influence whether PTET elections are still beneficial. Businesses should evaluate the potential tradeoffs, and keep watch for state-level PTET program updates.
Qualified Small Business Stock (QSBS)
The QSBS exclusion has increased from the greater of $10M or 10x basis to $15M or 10x basis. The aggregate asset limit has also increased from $50M to $75M.
The holding period required to claim exclusions has been updated:
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3 years for 50% exclusion
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4 years for 75% exclusion
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5 years for 100% exclusion
Effective dates vary by provision.
Excess Business Loss Limitation
The limitation on excess business losses for noncorporate taxpayers—originally set to expire after 2028—is now permanent.
Key Reporting and Policy Considerations
Tip and Overtime Deductions
Workers may now deduct:
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Up to $25,000 in qualified tips
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Up to $12,500 (single) or $25,000 (joint) in qualified overtime
These deductions apply to both itemizers and non-itemizers, with income phaseouts beginning at $150,000 (single) / $300,000 (joint).
Note: tips remain subject to payroll taxes and must be from industries with customary tipping prior to the Act. Mandatory gratuities are not eligible. IRS guidance will clarify allowable industries. Employers should start tracking tip data now.
Form 1099 Reporting Thresholds
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Form 1099-K: Reporting threshold reinstated to $20,000 and 200+ transactions, effective after December 31, 2024.
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Forms 1099-NEC & 1099-MISC: Threshold increased from $600 to $2,000, applicable to payments after December 31, 2025.
Tax Planning
With many business tax law changes—some retroactive and others phased in over future years—it’s essential to evaluate your options early. Multi-year modeling, strategic planning, and coordination with your tax advisor will be key to maximizing benefits and avoiding surprises.
Contact your Perkins advisor to start developing your tax strategy and ensure your business is prepared to take full advantage of the new law.