The One Big Beautiful Bill Act (OBBBA) is a sweeping package with lasting implications for business and individual tax planning. To help leaders cut through the noise, the DHJJ Tax Team hosted a webinar, led by Vicki Marsh, Senior Tax Manager, and Jamey Jagodzinski, Principal, to unpack the provisions and map out the most practical year-end planning moves. This article consolidates their guidance into an easy-to-read format, but the full webinar provides helpful context, examples, and live Q&A that you won’t find anywhere else. If you’re serious about planning, read this piece and watch the webinar for the deeper dive: What the OBBBA Means for Your Business
The Big Picture: Why OBBBA Matters
OBBBA removes much of the uncertainty created by temporary rules and sunset dates. Several high-impact provisions are now permanent, giving businesses the ability to plan multi-year instead of year-to-year.
Business Provisions
100 percent Bonus Depreciation
One of the most important business changes under OBBBA involves depreciation. Prior to the Act, bonus depreciation was being phased out, falling to 60 percent in 2024. OBBBA permanently restores 100 percent bonus depreciation for qualified property acquired on or after January 20, 2025, and placed in service in tax years beginning after December 31, 2024. In addition, the Section 179 expensing limit was expanded. Businesses can now expense up to $2.5 million of qualifying property, with the phase-out threshold increased to $4 million. These two provisions work differently, and taxpayers will need to carefully decide which to use. Section 179 is often more state-friendly and gives businesses the flexibility to choose specific assets for expensing, while bonus depreciation applies across entire asset classes and can be used even in years when a company is in a loss position.
20 percent Qualified Business Income (QBI) deduction
The Act also makes the 20 percent Qualified Business Income (QBI) deduction permanent. For taxpayers with income below the established thresholds, the calculation is straightforward, but for those above the thresholds, the deduction depends on factors like W-2 wages and the unadjusted basis in assets. Beginning in 2025, the income threshold for married filing jointly taxpayers is $394,600, with the deduction fully phased out at $494,600. By 2026, that phase-out window will widen, and the deduction will not be completely eliminated until $544,600 of income. This change gives flow-through business owners more certainty and greater opportunity to plan for the long term.
Section 163(j) interest deduction limitation
Another significant update is the change to the Section 163(j) interest deduction limitation. In recent years, business interest expense was capped at 30 percent of earnings before interest and taxes (EBIT). OBBBA restores the limitation to 30 percent of EBITDA—earnings before interest, taxes, depreciation, and amortization—on a permanent basis starting in 2025. This is a substantial benefit for capital-intensive businesses such as manufacturers, who will now be able to deduct more of their interest expense. Some taxpayers remain exempt from this limitation, including small businesses with average annual gross receipts of $31 million or less, electing real property trades or farming businesses (although they must use the Alternative Depreciation System and forgo bonus depreciation), and certain regulated utilities.
Research and Development (R&D) Expenses
Finally, the Act delivers long-awaited relief in the area of research and development (R&D) expenses. Under the Tax Cuts and Jobs Act, companies were required to capitalize and amortize domestic R&D costs beginning in 2022. OBBBA permanently restores the option to fully expense domestic R&D costs starting in 2025, although foreign research expenses must still be amortized over 15 years. For domestic costs capitalized between 2022 and 2024, businesses can either deduct the entire remaining balance in 2025 or spread the deduction over 2025 and 2026. Small businesses also have special options available, including applying the more favorable Section 174A rules retroactively, which in some cases may require amending prior returns.
Section 174 Planning Considerations
The restoration of R&D expensing comes with important planning decisions. Businesses must weigh the compliance cost of amending prior returns against the potential tax savings of taking immediate deductions in 2025 or splitting them across two years. They also need to consider the impact of these decisions on R&D tax credits, since deductions under Section 174 can impact credit eligibility. The 280C election, which limits the research credit in exchange for avoiding income add-backs, is once again relevant.
Timing also matters. Taxpayers should compare their historical and projected tax rates to determine when deductions will provide the greatest benefit. In some cases, amending prior returns to secure refunds from high-rate years may make sense, while in others, taking deductions in lower-rate years may be preferable. Net operating loss rules and the Excess Business Loss limitation must also be factored in, since large deductions can create losses that are not fully usable in the year they are generated. The key deadline to keep in mind is July 6, 2026, which is the cutoff for many small-business elections and amended return opportunities.
Individual Tax Provisions
For individuals, OBBBA makes permanent many of the tax rates introduced under the Tax Cuts and Jobs Act. The state and local tax (SALT) deduction cap is also increased to $40,000 for married filing jointly taxpayers, with a phasedown beginning at $500,000 of modified adjusted gross income. The deduction will never drop below $10,000, but it is scheduled to revert back to that level in 2030. The repeal of the Pease limitation on itemized deductions is also permanent, but a new cap has been introduced that limits the benefit of itemized deductions to 35 percent for those in the highest tax bracket.
Other changes include a permanent increase in the Child Tax Credit, which will rise to $2,200 beginning in 2025, with the familiar phaseouts of $200,000 for single filers and $400,000 for joint filers. Starting in 2026, non-itemizers will also be able to claim charitable deductions of up to $2,000 for joint filers and $1,000 for all others.
Miscellaneous Provisions
OBBBA also introduces several smaller, but meaningful, provisions. Individuals working in occupations where tipping was customary prior to 2025 will be able to deduct up to $25,000 in qualified tips per year between 2025 and 2028. Similarly, eligible taxpayers can deduct up to $12,500 of overtime compensation, or $25,000 for joint filers, during the same years. Both deductions phase out once income exceeds $150,000 for single filers and $300,000 for joint filers.
A new deduction of up to $10,000 will be available for interest paid on loans for new U.S.-assembled vehicles, taken out or refinanced between 2025 and 2028. Importantly, this deduction is available even to non-itemizers. The Act also raises the estate and gift tax exemption to $15 million beginning in 2026, with annual inflation adjustments thereafter. Finally, reporting thresholds for 1099 forms will increase in 2026, with the 1099-NEC and 1099-MISC rising from $600 to $2,000, and the 1099-K reverting to pre-2022 levels of $20,000 and 200 transactions. While reporting requirements are changing, income remains taxable regardless of whether a form is issued.
Planning With New Business-Friendly Provisions
With several provisions now made permanent, businesses and individuals can engage in more deliberate, multi-year tax planning. The interaction between R&D expensing, interest deductibility, bonus depreciation, and Excess Business Loss rules creates both opportunities and risks. For example, taking too many deductions in a single year may generate losses that are subject to limitations or carry-forward restrictions, while spreading them out may deliver more usable benefits.
There are also opportunities to strategically create income in years when deductions are expected to reduce taxable income below normal levels. For some taxpayers, this might mean accelerating a Roth conversion to take advantage of lower tax brackets. Others may choose to delay charitable contributions to avoid hitting deduction caps in low-income years. With bonus depreciation now permanent, companies can also plan capital expenditures more flexibly, staging them over multiple years rather than feeling pressured to act immediately.
Q&A Highlights
During the webinar, participants asked practical questions about how the Act will work in real-world scenarios.
One business owner wanted to know whether purchasing a work truck could be expensed under the new rules, and the answer was yes, subject to business-use requirements; such assets generally qualify for 100 percent bonus depreciation. Another question focused on Roth conversions, with participants wondering whether the permanence of tax rates reduced the urgency. As Jamey explained, the decision depends on each taxpayer’s situation, but low-income years created by new deductions may still be ideal opportunities for conversions.
Other questions clarified that the $40,000 SALT cap is not permanent and will revert to $10,000 in 2030, that equipment purchased under binding contracts before January 20, 2025, will not qualify for the new bonus rules, and that “permanent” changes can always be altered by future legislation. Finally, the July 6, 2026, deadline for R&D elections was emphasized as a date all small businesses should note.
Year-End Planning with OBBBA
The OBBBA introduces many favorable changes for both businesses and individuals, but taking full advantage of them requires thoughtful planning. Year-end 2025 will be a pivotal moment to decide how to apply R&D expensing, whether to amend prior returns, how to sequence capital investments, and how to coordinate new deductions with individual tax strategies.
To help guide you through this process, DHJJ has created a practical resource: the End-of-Year OBBBA Planning Checklist. We encourage you to download it and use it as you work with your advisors to develop a plan that maximizes the benefits of the new law.
And don’t forget, this article offers an overview, but the webinar replay provides the full depth of analysis and examples from Vicki Marsh and Jamey Jagodzinski. Watching the session will give you the insights you need to approach year-end with confidence.
