Sweeping tax legislation (the Act), signed into law on July 4, 2025, informally known as the One Big Beautiful Bill (OBBB), introduces major reforms that will impact businesses across the country. This comprehensive Act brings significant changes to tax deductions, depreciation rules, reporting requirements, executive compensation, and energy-related incentives. Whether you’re a small business owner or part of a large corporation, understanding the implications of the OBBB will be essential for staying compliant and optimizing your tax strategy moving forward.
Key Business Tax Provisions of the OBBB
Qualified Business Income (QBI) deduction
The QBI deduction is made permanent. It also introduces a new $400 minimum deduction for “applicable taxpayers”—those with at least $1,000 in aggregate QBI from all active trades or businesses. Additionally, the phase-in thresholds for QBI limits increase to $75,000 for single filers and $150,000 for joint filers, with inflation indexing beginning after 2026.
Bonus depreciation
Bonus depreciation receives a substantial boost under the Act. The existing provision, which was set to phase out, is now made permanent at 100% for qualified property acquired after January 19, 2025. A new provision also offers 100% bonus depreciation for “qualified production property,” a category that includes certain types of non-residential real property used in manufacturing, refining, or production. This particular rule takes effect for property placed in service after July 4, 2025.
179 Expensing limits
Section 179 expensing limits are increased significantly. For property placed in service after 2024, the expensing limit rises to $2.5 million, while the phase-out threshold jumps to $4 million, both of which will be adjusted for inflation moving forward.
Business Interest
The calculation of deductible business interest under IRC Section 163(j) is also revised starting in 2026, due to changes in how adjusted taxable income is defined.
Deduction limitation for compensation of publicly held corporation executives
For publicly held corporations, the deduction limitation for executive compensation under IRC Section 162 (m) is broadened. Beginning in post-2025 tax years, compensation paid to executives within a corporation’s entire controlled group or affiliated service group is now subject to the $1 million per-year deduction cap.
Foreign tax credit (FTC)–allocation of deductions to foreign source net CFC tested income
The Foreign Tax Credit regime has also undergone substantial change. The legislation rebrands GILTI (Global Intangible Low-Taxed Income) as “net CFC tested income” and narrows the types of deductions that can be allocated to that category to (i) the deduction for net CFC tested income itself as well as for taxes imposed on that income and (ii) any other deductions directly allocable to net CFC tested income. Notably, interest expense and research and experimentation (R&E) expenses are now excluded. Deductions that would have previously applied to this category must instead be allocated to U.S. source income for FTC limitation purposes, effective in tax years beginning after 2025.
Exclusion of Gain on sale of Qualified Small Business Stock
For investors, changes to Qualified Small Business Stock (QSBS) are particularly noteworthy. The gain exclusion now varies by holding period: 50% for three years, 75% for four, and 100% for five years. The maximum gain exclusion increases from $10 million to $15 million, and the asset limit for QSBS eligibility rises from $50 million to $75 million, with future inflation adjustments.
Manufacturing Investment Credit
The Act also enhances the advanced manufacturing investment credit (commonly known as the CHIPS credit). For eligible property placed in service after 2025, the credit increases from 25% to 35%, provided the facility is completed before January 1, 2027.
Information Reporting
Information reporting thresholds have been revised as well. The Form 1099-K threshold reverts to the pre-ARPA standard of $20,000 and 200 transactions. For Forms 1099-NEC and 1099-MISC, the reporting threshold increases from $600 to $2,000 for payments made after 2025, with inflation adjustments beginning in 2027.
Gain on Sale of Certain Farmland Property
Farmers benefit from a new provision allowing capital gains taxes from the sale of qualified farmland to be paid in four equal annual installments. This election applies to sales occurring after July 4, 2025. However, if a payment is missed, the remaining balance becomes immediately due.
Corporate Charitable Contributions
Corporations making charitable contributions face new limitations. While the existing 10% cap on deductions remains, a new 1% minimum floor has been introduced for post-2025 tax years.
Excess Business Losses
The limitation on excess business losses under Section 461(l), previously temporary, is now made permanent.
Energy Related Revisions
Numerous energy-related provisions are also revised or repealed. The energy-efficient commercial building deduction will terminate for construction beginning after June 30, 2026. The five-year MACRS classification for energy property is eliminated for projects beginning after 2024. The advanced energy project credit is modified to remove “add back” requirements for revoked certifications, effective July 4, 2025.
The advanced manufacturing production credit will phase out for wind energy components after 2027 and introduces new restrictions for critical minerals and foreign entities. Both the energy-efficient home improvement credit under Section 25C and the new home credit under Section 45L are terminated for improvements or acquisitions made after 2025 and June 30, 2026, respectively.
Other notable changes include the termination of the residential clean energy credit for expenditures made after 2025, the end of clean vehicle credits (including commercial vehicles) for acquisitions after September 30, 2025, and the expiration of the alternative fuel vehicle refueling property credit (such as EV chargers) for property placed in service after June 30, 2026.
How Will the One Big Beautiful Bill Impact Your Business
These updates represent only a portion of what’s included in the One Big Beautiful Bill. Given the breadth and complexity of these changes, we recommend you consult your tax advisor to assess how the Act will impact your business and to identify steps you can take to align your strategy with the new law.