One Big Beautiful Bill

Permanently restored: Immediate expensing for domestic research and development (R&D) expenses. Instead of deducting these expenditures over a 5-year period, this provision allows taxpayers to immediately deduct domestic research or experimental expenditures paid or incurred in taxable years beginning after December 31, 2024, and before January 1, 2030.

Small businesses with gross receipts of $31 million or less can retroactively expense R&D back to after December 31, 2021 and all other domestic R&D between December 31, 2021 and January 1, 2025 can accelerate remaining deductions over a one- or two-year period.

Permanently restored: 100% bonus depreciation, which means businesses can immediately deduct the full cost of qualifying tangible property. This applies to eligible assets acquired and placed in service after January 19, 2025.

This includes assets like machinery, equipment, and certain improvements. For real estate, this could involve a cost segregation study to identify and depreciate building components with shorter useful lives. For example, under OBBB, qualified production property (QPP) used for manufacturing, production, or refining of certain tangible personal property in the US is eligible for 100% bonus depreciation through 2030.

Increased: This provision increases the Section 179 expensing limits, allowing businesses to immediately deduct more of the cost of qualifying property:

• New limit: Up to $2.5 million can be expensed.
• Phase-out threshold: Begins phasing out when total qualifying property placed in service exceeds $4 million.
• Both amounts will be adjusted for inflation starting in 2026.
• Applies to property placed in service in tax years beginning after December 31, 2024.

This makes it easier for small and mid-sized businesses to invest in assets without the complexity of long-term depreciation.

Permanently restored: 199A (QBI) deduction provisions permanent and keeps the deduction rate of 20%.

This provision also expands the deduction limit phase-in range by increasing the $50,000 (non-joint returns) and $100,000 (joint returns) amounts to $75,000 and $150,000, respectively. This eases the impact of those limits for “specified service trades or businesses” as well as for entities subject to the wage and investment limitations in Code Section 199A. The OBBB also introduces a new, inflation-adjusted, minimum deduction of $400 for taxpayers who have at least $1,000 of QBI from one or more active trades or businesses in which the taxpayer materially participates. These changes, collectively, create a more favorable tax position for some small businesses, by increasing deductions for QBI for those that qualify for these new provisions.

Permanently restored: EBITDA-based limitation on business net interest deductions.

This provision also temporarily increases the cap for tax years 2025–2029 by calculating income using EBITDA instead of EBIT, allowing for greater deductions. It also permanently expands the definition of “motor vehicle” to include certain trailers and campers designed to be towed or attached to a vehicle.

New: Implement a 1% floor on the deduction of charitable contributions made by corporations.

In addition to the annual ceiling of 10% of taxable income that is applied to a corporation’s charitable contributions, the OBBB puts a floor of 1% of taxable income on the amount of charitable contributions a corporation must make to receive a deduction, effective beginning in 2026.

Repealed: There is now accelerated phase outs and eliminations of many of the green energy tax credits enacted as part of the 2022 Inflation Reduction Act.

Expanded: the tax exclusion for gains from the sale of QSBS.

The OBBB includes three significant expansions to Section 1202, the exclusion of gain recognition for the sale of qualified small business stock (QSBS):

1. The required holding period for QSBS benefits for stock acquired after the applicable date would be reduced from 5 years to 3 years, with 50% benefits phasing in beginning after a three-year holding period. A four-year holding period rises to 75%, and a five-year holding period receives the full 100% exclusion. 
2. $15 million (up from $10 million) of gain from stock acquired after the applicable date could be excluded. Note, however, that the 10x basis rule does not change, so the exclusion will apply to the greater of $15 million or 10x the taxpayer’s basis.
3. The permitted gross assets limit increases from $50 million to $75 million.

Permanently increases: The employer-provided child care credit (section 45F) is increased from $150,000/year on up to 25% percent of qualified child care expenses provided to employees to $500,000/year on up to 40%.

A business must spend at least $1.25 million on child care related expenses to receive the new full credit.

Makes permanent: Opportunity Zone (OZ) incentives, with some changes.

The most significant is the change to the definition of “low-income community:” The definition of “low-income community” is narrowed to census tracts that have a poverty rate of at least 20 percent or a median family income that does not exceed 70% (formerly 80%) of the area median income. OBBB also provides enhanced benefits for investments in rural OZs. 

Permanently extends: Code section 45S employer tax credit for paid family and medical leave, originally set to expire at the end of 2025.

This also modifies the credit to be claimed for an applicable percentage of premiums paid or incurred by an eligible employer during a taxable year for insurance policies that provide paid family and medical leave for qualifying employees, and lowers the minimum employee work requirement from 1-year to 6 months at the election of the employer.

Increased Threshold: The OBBB raises the de minimis threshold for information reporting (e.g., Forms 1099-NEC and 1099-MISC), from $600 to $2,000, effective beginning in 2026. This change, although small, may save significant time and effort for businesses that otherwise struggle to meet reporting requirements timely—and who typically file Forms 1099 late (or fail to file them at all).