On July 4, 2025, the One Big Beautiful Bill Act (the OBBBA) was signed into law, ushering in substantial changes to business-related tax provisions and incentives. Navigating these updates will be essential for effective tax planning and helping your business to maximize available opportunities.

Below are highlights of some provisions that could affect your business:

• Bonus depreciation: The OBBBA makes additional first-year (bonus) depreciation for certain qualified property permanent at 100% (under prior law, it was to phase out to zero). This provision is effective for property acquired after January 19, 2025. This allows businesses to fully expense capital assets such as machinery and equipment that are placed in service after January 19, 2025.

There is also a new 100% bonus depreciation provision for qualified production property (“QPP”), which is certain non-residential real property used in the manufacturing, production or refining of certain tangible personal property. However, QPP does not include property not used for production such as office space or research facilities. This QPP provision is effective for property placed in service after July 4, 2025.

• New Section 179 expensing limits: Section 179 allows immediate expensing deduction for certain business property. For property placed in service after December 31, 2024, the OBBBA increases the statutory expensing limit to $2,500,000 and increases the phase-down threshold to $4,000,000 (both subject to inflation adjustments). This allows businesses to deduct more of their smaller capital purchases upfront.
• Business interest limitation: Under Section 163(j), business interest deduction cannot exceed, among other things, 30% of a taxpayer’s adjusted taxable income (ATI). Under prior law, a taxpayer’s ATI was computed without regard to depreciation or amortization. The OBBBA amends the definition of ATI by adding back depreciation and amortization for determining the limit on deductible business interest expense. As a result, ATI is now determined based on EBITDA rather than EBIT. This allows capital-intensive businesses to have higher interest deductibility and cash flow. This applies to tax years beginning after December 31, 2024.
• Advanced manufacturing investment credit: Also known as the semiconductor or the CHIPS credit, this credit on qualified investments in an advanced manufacturing facility built before January 1, 2027 is now increased to 35% (up from 25%) for property placed in service after December 31, 2025.
• Information reporting, Form 1099-K: The OBBBA retroactively reverts the de minimis exception to the threshold before the American Rescue Plan Act of 2021, which means that only aggregate transactions in a year for a payee exceeding both $20,000 and 200 transactions are required to be reported on Form 1099-K.
• Information reporting, Form 1099-NEC, 1099-MISC: Effective for payments made after December 31, 2025, the OBBBA increases the reporting thresholds for remuneration to non-employees from $600 to $2,000 (adjusted for inflation after 2026).
• Energy efficient commercial buildings deduction: Under prior law, taxpayers could claim a deduction equal to the cost of energy efficient commercial building property placed in service during the tax year, subject to limitations based on square footage, previous deductions claimed, and the amount of reduction of energy and power costs, etc. The OBBBA terminates this deduction for the cost of energy efficient commercial building property where construction begins after June 30, 2026.
• Cost recovery for energy property: Under prior law, certain energy property (e.g., solar panels, wind turbines, geothermal systems, etc.) classified as 5-year property is eligible for accelerated depreciation under MACRS. The OBBBA removes this five-year classification, thereby reducing the upfront tax benefits of clean energy investments for property where construction begins after December 31, 2024.
• Advanced energy project credit: Allocations of the advanced energy project credit are subject to a cumulative (not annual) $10 billion limit. Under prior law, if a project certification was revoked, the amount previously allocated to that project was added back to the unused portion of the $10 billion limit. The OBBBA discontinues this add-back, effective July 4, 2025.
• Advanced manufacturing product credit: Among its many other changes to this credit, the OBBBA terminates the advanced manufacturing product credit for wind energy components produced and sold after December 31, 2027.

Please feel free to contact us to discuss specific provisions impacting your business and to develop a strategy tailored to your specific needs.

This article summarizes aspects of the law. This article does not constitute legal advice. For legal advice for your situation, you should contact an attorney.