Businesses look for opportunities to reduce tax burdens, but the rules keep shifting. Many assume they’ve already done enough. Then a new law changes the picture. The One Big Beautiful Bill Act (OBBBA) introduced several time-sensitive provisions. Understanding how they apply can reduce taxes before the window on valuable deductions closes. The 2025 OBBBA tax law adds even more complexity to planning.
Understanding OBBBA and Its Impact on Your Business
The One Big Beautiful Bill Act (OBBBA) introduced a wide range of tax rules aimed at encouraging business investment and simplifying certain write-offs. For many companies, it has opened the door to accelerated write-offs and expanded eligibility for deductions that were previously out of reach.
At the same time, it has introduced new limitations and deadlines that call for careful planning. For example, changes to R&D amortization and interest expense limitations could affect how companies approach year-end financial decisions.
Companies that monitor these updates gain greater control over taxable income and long-term strategy. The more familiar you are with the mechanics of OBBBA 2025, the more strategic your tax decisions can become.
Use 100% Bonus Depreciation
Under OBBBA, businesses can now claim 100% bonus depreciation on qualifying property placed in service after January 19, 2025. This rule lets companies deduct the full costs of eligible assets, such as equipment, machinery, or qualified improvement property, upfront rather than depreciating them over time.
Unlike prior rules, OBBBA makes 100% bonus depreciation permanent. That means the benefit will continue beyond 2025. This change is critical for multi-year planning. Timing the tax deduction to get the greatest benefit is important.
Maximize Your QBI Deduction for 2025
The Qualified Business Income deduction remains a powerful tool for pass-through entities, but timing and eligibility matter. For 2025, income thresholds, wage limits, and specified service trade or business (SSTB) rules could affect qualification. Business owners should review projected taxable income against the QBI calculation rules.
Modifying compensation levels, retirement contributions, or entity structure before year-end could boost results. Since the deduction may reach up to 20% of qualified income, small adjustments can yield a significant impact.
Waiting until filing season limits flexibility. Reviewing now allows time to act while more planning options are still on the table.
Claim New Deductions: Tips, Overtime, Auto Loans –
OBBBA introduced or expanded several business deductions that may apply for the first time this year. Some relate to labor costs, while others affect how vehicle financing is treated for business use. These deductions can lower taxable income if properly documented. Key areas to review include:
- Employee tips that are tracked and reported under updated IRS guidelines
- Overtime pay is eligible for expanded wage-based deductions under revised thresholds
- Auto loan interest deductions for qualifying business vehicles based on new financing rules
Each area has its own documentation requirements. Reviewing expenses now helps ensure eligible write‑offs aren’t overlooked later.
Plan Around the SALT Cap and PTET Election
The federal cap on state and local tax (SALT) deductions increases to $40,000 in 2025, but this expansion includes certain adjusted gross income (AGI) limitations. As a result, high-income business owners may still face deduction limits.
Many states continue to offer a pass-through entity tax (PTET) election that shifts the deduction to the business level. This approach allows the entity to deduct state taxes paid, effectively bypassing the cap for eligible owners.
The rules and deadlines for PTET elections vary by state. Businesses that operate in multiple jurisdictions should assess the timing and requirements for each. Making the election before year-end can lead to a better tax result, especially for partnerships and S corporations. Coordination between tax and finance teams is key to making it work efficiently. Planning for the SALT deduction in 2025 could provide meaningful savings when handled early.
Review Business Loss Limits and Interest Deductions –
Several provisions under OBBBA affect how businesses calculate allowable losses and deduct interest expenses. These limits can significantly change taxable income, especially for companies with variable earnings or significant debt. Two areas deserve close attention:
- Business loss limitations under Section 461(l), which may disallow certain excess business losses and carry them forward instead
- Interest expense limitations under Section 163(j), which may loosen this year due to the calculation reverting to EBITDA (rather than EBIT)
These rules have been revised under OBBBA and may continue to evolve in future years. Reviewing projected income, financing structure, and planned deductions can help businesses prepare. Proactive analysis now may reduce surprises during filing and support better year-end tax planning, especially for those planning to deduct R&D costs next year.
Be Aware of Expiring OBBBA Tax Provisions –
Several tax benefits introduced under OBBBA were originally designed to sunset or scale back. However, OBBBA has made key provisions permanent, shifting the focus from expiration to strategic use. Important updates include:
- 100% bonus depreciation is now permanent under OBBBA
- Increased Section 179 expensing thresholds have also been made permanent
- Some employee meals will no longer be deductible beginning in 2026, scaling back previously allowed business meal deductions
- Full expensing of R&D costs has been made permanent, avoiding the shift to amortization over longer recovery periods
With the above rules now permanent, companies can now do multi year tax planning with a clear understanding of what the rules will be.
Work With a Trusted Advisor to Apply OBBBA
Navigating OBBBA’s tax provisions requires more than a simple checklist. Timing, eligibility, and interplay among deductions affect final results. A thorough review of business structure, income projections, and planned investments can reveal opportunities that might otherwise be missed.
Working with a qualified tax adviser helps align financial plans with long‑term goals. That matters most when changes such as R&D amortization or interest‑deduction limits could have lasting effects.
DHJJ works with businesses to identify strategies that fit their operations and timelines. Contact us to discuss how you can use OBBBA provisions to your advantage for 2025 planning and the years that follow. Tax planning should include multiple years to get the best benefit. This type of planning is now easier with laws that are “permanent”. That is, until Congress changes the rules again in a few years.
