The One Big Beautiful Bill Act (OBBB), signed July 4, 2025, brings sweeping federal tax updates that will reshape your year-end planning. We’ve identified the provisions—bonus depreciation, Sec. 179 expensing, QBI deductions, new above-the-line breaks, R&D expensing, and international rules (as well as others), that matter most to your business. Read on to see exactly where our team will step in to model scenarios, prepare tax projections, and turn each change into an actionable advantage.
Equipment Expensing and Investment Planning
Provision Overview:
The bill permanently extends 100% bonus depreciation for qualified property acquired and placed in service on or after January 19, 2025, and raises the Section 179 expensing limit under the Internal Revenue Code to $2.5 million, with phaseouts beginning at $4 million. This allows businesses to deduct the full cost of certain capital assets, including equipment and machinery, in the year they are placed into service. These updates are designed to stimulate reinvestment and support capital-intensive industries.
Employer Planning Responsibilities:
Business owners should coordinate with finance teams and tax advisors to evaluate the timing of asset purchases. Documentation of placed-in-service dates, proper asset classification, and coordination with project timelines are essential. Businesses should also assess whether current accounting systems accurately track depreciation and ensure compliance with new thresholds.
Research and Experimental Expenditures Capitalization Requirement removed.
Provision Overview:
Section 174 and new Section 174A allows businesses to now deduct R&D costs in the year incurred for tax years beginning after 12/31/24. Unamortized costs can be deducted over a one-year period or ratably over a two-year period starting in 2025. Further, the new law provides options to small business taxpayers to accelerate the remaining deductions for previously capitalized R&D costs by amending 2022 – 2024.
Employer Planning Responsibility:
Qualifying Business owners should evaluate the tax impact of amending past returns with capitalized R&D expenses vs. deducting the previously capitalized costs all in 2025 or ratably over 2025 and 2026. This could result in significantly differing tax results.
Section 163(j) Interest limitations
Provision Overview:
The new law reinstates the EBITDA limitation under Sec. 163(j) for tax years beginning after Dec. 31, 2024, and before Jan. 1, 2030. Under prior law, interest deductions were generally limited to 30% of EBIT. The new law increases the limitation to 30% of EBITDA. This provision does not apply to small business taxpayers (taxpayers with average gross receipts of less than $31 million).
Employer Planning Responsibilities:
With increased deductibility of interest, business owners should factor this in when evaluating financing terms. Further, business ownership should work with their tax advisors to see how the higher limitation will impact their tax burden.
Section 199A Qualified Business Income (QBI) Deduction Made Permanent
Provision Overview:
The Qualified Business Income (QBI) deduction under Section 199A allows eligible owners of pass-through entities to deduct up to 20 percent of qualified business income. The new law makes this deduction permanent and expands income thresholds, including a $400 minimum deduction.
Employer Planning Responsibilities:
Business owners should reassess how they structure compensation and distributions. This includes reviewing W-2 wages, guaranteed partner payments, and overall entity structure. Proactive planning with tax professionals will help optimize the deduction and avoid phaseouts, particularly for businesses nearing income limits. The overall change was minor but now taxpayers have some certainty with the provision now becoming permanent.
Above-the-Line Deduction for Tips and Overtime Compensation
Provision Overview:
From tax years 2025 through 2028 (a temporary provision), individual employees can claim above-the-line deductions of up to $25,000 per taxpayer in reported tips and $12,500 per taxpayer in overtime wages under the new Section 62(a)(22), subject to phaseouts beginning at $150,000 of modified adjusted gross income. The deductions apply only to amounts properly reported and paid through payroll.
Employer Planning Responsibilities:
Employers must ensure their payroll systems accurately capture overtime and tip income, with clear records and W-2 documentation. Updating employee handbooks, providing training on tip reporting, and ensuring time-tracking compliance are critical steps. Employers should also consider informing employees of this benefit during tax season or through internal communications.
Turning Legislative Change into Tax Savings
These tax-code enhancements offer real savings—but only with proactive, expert guidance. Now is the time to convene your tax advisory team to map out asset-purchase timing, entity-structure tweaks, employee communications and global-tax strategies. Together, we’ll deploy our proprietary checklists, modeling tools and reporting frameworks to capture every deduction, keep you compliant and fuel your long-term growth.
