Navigating the One Big Beautiful Bill Act: Key Business Insights

Understanding new federal legislations like the "One Big Beautiful Bill Act" can be daunting. This act builds on the Tax Cuts and Jobs Act of 2017, introducing significant tax reforms for businesses. Here's a clear guide to the essential changes and what they mean for your business.

Bonus Depreciation Returns

Businesses can now permanently expense 100% of qualified capital assets acquired from January 20, 2025. This includes manufacturing buildings placed in service before 2031, providing a boost to capital investments.

Expansion of Business Interest Deduction

The EBITDA-based limit has returned, offering larger deductions. There is also new guidance on how these deductions interact with capitalization rules, allowing for more flexibility.

R&D Expensing Reinstated

Domestic research costs are again fully deductible, and the accelerated recovery of capitalized R&D from 2022–2024 is permitted. However, foreign R&D must be amortized, requiring careful planning.

Qualified Business Income Deduction Enhancement

The 20% QBI deduction is now a permanent fixture, with eligibility expanded to $75,000 for single filers and $150,000 for joint filers, benefiting a wider range of smaller businesses.

Charitable Deduction and Meal Deduction Adjustments

A new 1% floor on corporate giving and a 0.5% AGI floor for individuals itemizing deductions will impact charitable strategies. Meanwhile, the deduction for on-site employer-provided meals will be limited in 2026, except for certain fishing businesses.

Tax Code Overhauls and Enforcements

Significant changes also include the repeal of moving expense exclusions (except for military personnel) and an increase in the limit on taxable REIT subsidiary holdings from 20% to 25% in 2026. The IRS has expanded enforcement powers and increased oversight related to erroneous ERTC claims, which calls for diligent compliance.

Strategic Considerations for Businesses

With the permanent casualty loss deduction rules now including state-declared disaster losses, and opportunity zones seeing enhanced definitions and rural incentives, strategy overhauls are crucial. Additionally, the energy credit reductions underscore the need for a fresh look at green initiatives.

The One Big Beautiful Bill Act represents a sweeping change, but with proactive planning and professional advice, businesses can navigate these tax reforms effectively. Regular consultations with financial advisors can ensure your business remains compliant and optimized under these new rules.