On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law. This sweeping tax reform package marks the most comprehensive overhaul of the U.S. tax code since the Tax Cuts and Jobs Act (TCJA). This legislation introduces sweeping changes that will affect individuals, businesses, and tax-exempt organizations across the country. At The Bonadio Group, we’re committed to helping our clients navigate this new landscape with clarity and confidence. Below is a comprehensive breakdown of the most critical business-related provisions, with actionable strategies for strategic consideration in the months and years ahead as we all navigate this new tax landscape. And what comes next.
Capital Investment & Expensing
The law permanently reinstates 100% bonus depreciation for qualified property acquired and placed in service on or after January 19, 2025. For this purpose, property is treated as “acquired” on the date a binding written contract is entered into, meaning assets subject to such a contract dated before January 19, 2025, will not qualify, even if placed in service afterward. Additionally, to qualify, the original use of the property must commence with the taxpayer, construction must begin after January 19, 2025, and before January 1, 2029, and the property must be placed in service before January 1, 2031. Lastly, the new law expands eligibility for 100% bonus depreciation to include certain manufacturing facilities, provided they are placed in service before January 1, 2031.
Business Interest
The favorable EBITDA-based calculation of the business interest deduction limit is permanently reinstated for tax years beginning in 2025. The law provides specific rules for how the business interest expense limitation interacts with other tax provisions that capitalize interest.
Research & Experimentation Costs
The law permanently allows immediate expensing of domestic research & experimentation costs, reversing the TCJA’s amortization requirement. Businesses that capitalized research expenses from 2022 through 2024 can now accelerate recovery of such deductions, and small businesses with average annual gross receipts under $31 million may apply this change retroactively to tax years beginning after December 31, 2021.
Pass-Through Entities
The Section 199A Qualified Business Income (QBI) deduction is now permanent at the current 20% rate. The phase-in thresholds have been expanded to $75,000 for single filers and $150,000 for joint filers, broadening access without altering the deduction’s mechanics.
Excess Business Loss (EBL) Rules
The law makes permanent the Section 461(l) limitation on excess business losses. Unlike the House version of the bill, which had proposed a more restrictive proposal to permanently deny excess losses, the final passed version of the law retains the current treatment of disallowed losses as net operating loss (NOL) carryforwards in future years.
Gains from Sale of Qualified Small Business Stock (QSBS)
The gain on sale of QSBS acquired after July 4, 2025, is excluded from income under a new schedule based on the holding period of the QSBS (50% exclusion after 3 years, 75% exclusion after 4 years, and 100% exclusion after 5 years). In addition, the per-issuer limitation of income available to be excluded, as well as the business gross asset limitation, have been increased and indexed for inflation in future years. QSBS acquired prior to July 4, 2025 remains subject to the rules that were in place prior to enactment of the OBBBA.
Charitable Contributions
A new 1% floor was enacted on corporate charitable deductions (only contributions exceeding 1% of taxable income are deductible), which may prompt businesses to reassess philanthropic strategies and optimize giving. The charitable contributions disallowed by the 1% floor carry forward to future years, but only if such contributions exceed the upper limit of 10% of modified taxable income.
Real Estate & REITs
Real Estate Investment Trusts (REITs) can now hold up to 25% of total assets in taxable REIT subsidiaries (up from 20%), effective in 2026.
Deduction for Employer-Provided Meals
Starting in 2026, employers may deduct 100% of the cost of meals provided to their employees if, in the normal course of their business, such meals are sold to customers at full value.
Employee Retention Credit
The law disallows ERTC refunds for Q3 and Q4 2021 if filed after Jan. 31, 2024, extends the audit window to six years, and introduces additional promoter penalties and recordkeeping mandates. Businesses that filed ERC claims after the cutoff should review their filings to prepare for potential IRS scrutiny.
What’s Next & Final Thoughts
Now that the OBBBA is law, the IRS and Treasury will be working to implement the changes therein. This means clarifying ambiguous provisions (e.g., are tips provided via an app eligible for above-the-line deduction?), updating forms and systems, and training staff on new provisions. Given the need for agency implementation and guidance, there may be delays and uncertainty in the short term, so it is important that businesses should work closely with their tax advisors to monitor developments and prepare for evolving interpretations.
The “One Big Beautiful Bill” is a landmark piece of legislation—but it’s only the beginning. Businesses must stay agile, informed, and proactive as the IRS rolls out guidance and Congress considers follow-up measures.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
For more details about what is in the new OBBBA law and its implications for you, please join us on July 18th for a webinar where we’ll break down these changes and answer your questions live. Click the link below to learn more and register.
