What the One Big Beautiful Bill Act Means for Businesses
Published on by Dave Phelps in Tax Services
What does the “One Big Beautiful Bill Act” (OBBBA) mean for your business? There’s a lot to unpack here, and we’ll be covering the implications in a series of blog posts, starting with this one. Today, we’re looking at the implications of the OBBBA for businesses, and you may also be interested in our post on the impact of the OBBBA on individuals.
First, the OBBBA provides significant permanent tax relief and incentives for small and mid-size businesses, including enhanced deductions, increased expensing limits, and expanded credits. However, the new state and local tax (SALT) rules introduce additional complexity for passthrough entities.
Here’s an overview of what you need to know.
Qualified Business Income (QBI) deduction
- QBI allows for a deduction of up to 20% of qualified business income from pass-through entities.
- The income threshold for the QBI deduction has increased, allowing more business owners to benefit before the phase-out begins.
- A new minimum deduction of $400 is available for those with at least $1,000 in qualified business income from active trades or businesses.
- The QBI deduction is now permanent.
Full expensing (bonus depreciation)
- 100% bonus depreciation for qualified business property is now permanent, enabling immediate deduction of the full cost of eligible property.
- For the first year after enactment, you may elect to use a reduced expensing percentage (40% or 60%) if preferred.
- The Section 179 expensing limit has increased to $2.5 million, with the phaseout threshold raised to $4 million. Both amounts are indexed for inflation.
Expensing of domestic R&D expenditures
- Domestic research and experimental expenditures can now be fully expensed in the year incurred, rather than amortized over five years. Foreign R&D must still be amortized over 15 years.
State and Local Tax (SALT) deduction changes
- For 2025, the SALT deduction cap is temporarily increased to $40,000 ($20,000 for married filing separately), with a floor of $10,000. After 2029, the cap reverts to $10,000.
- Passthrough entity tax (PTET) regimes remain available for 2025, but a new, more complex SALT regime applies after that, with significant restrictions and compliance requirements for passthroughs.
Qualified Small Business Stock (QSBS) expansion
- For stock acquired after enactment, the exclusion is 50% at 3 years, 75% at 4 years, and 100% at 5 years. The per-issuer limit is increased to $15 million, and the gross assets test is raised to $75 million, both indexed for inflation.
Reporting and compliance changes
- The 1099-MISC/NEC reporting threshold is raised from $600 to $2,000, reducing compliance burdens.
- The $20,000/200 transaction threshold is restored for third-party network transaction reporting, benefiting small online sellers.
- These changes are effective starting in 2026.
Excess business losses
- Excess business loss limitation is now permanent, and taxpayers can continue to treat excess losses carried to subsequent years as net operating losses.
- For 2025, the threshold amount is $626,000 for married couples filing jointly and $313,000 for other filing statuses.
Other business tax provisions
- The business interest deduction limitation is now permanently based on EBITDA, increasing the amount of deductible business interest.
- 100% expensing is allowed for certain nonresidential real property used in qualified production activities, with recapture rules if the property ceases to be used in production within 10 years.
- The New Markets Tax Credit and enhancements to the Low-Income Housing Tax Credit are now permanent.
What to do next
Have questions about how the OBBA will impact your business? Contact us today for a free consultation with one of our leading tax pros. You can also read about what the OBBBA means for individuals here. As always, we’re here to help.
