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Discover how the Big Beautiful Bill is reshaping corporate tax strategy, compliance, and planning in today’s evolving regulatory landscape.
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, marks the most significant federal tax reform since the Tax Cuts and Jobs Act (TCJA) of 2017. This act not only permanently extends and expands numerous TCJA provisions but also introduces new incentives designed to encourage capital investment, R&D, and overall business growth.
| Provision | Examples of who benefits |
|---|---|
| Permanent 100% bonus depreciation & expanded Section 179 expensing | Manufacturers, tech, construction |
| Expanded R&D credits & semiconductor production credit | Tech, R&D-intensive firms |
| Permanent 20% Qualified Business Income (QBI) Deduction | Pass‑through entities |
| Greater interest deductibility (Section 163(j) and Net operating loss (NOL) rules) | Debt-financed businesses |
| Raised State and Local Tax (SALT) cap to $40,000 | Taxpayers with income of less than $500,000 |
| Increased estate tax exemption to $15,000,000 per spouse | Family-owned businesses |
The OBBBA delivers sweeping, long-term tax advantages for businesses of all sizes, especially medium and large enterprises. While clean-energy incentives were rolled back, the overall package positions many businesses to reinvest, grow, and plan with greater certainty.
Note: Now that bonus depreciation has been extended, Section 179 will likely be utilized less. However, there are situations where Section 179 might be more beneficial. While bonus depreciation must be applied to all assets in the class, Section 179 might be the optimal choice if your business has specific assets that it wants to target for full expensing.
Example: A midsize manufacturing company invests $50 million in qualified production property in February 2026. It can immediately deduct the entire amount. At a 21% corporate rate, that yields a $10.5 million tax benefit.
The OBBBA made the following modifications to research and production credits:
Example: A large US company that designs AI chips spent $20 million on R&D and $40 million on a new semiconductor fabrication facility in 2025. Under the OBBBA, it can fully expense the R&D costs, claim a 35% semiconductor production credit ($14 million), and receive enhanced R&D tax credit. These incentives significantly reduce the cost of innovation and expansion.
The 20% QBI deduction for pass-through and privately held businesses is made permanent. This provides lasting tax relief for pass-through entities like S-corps, partnerships, and LLCs.
Example: A midsize firm organized as an LLC has $15 million in taxable income and meets the criteria for the 20% QBI benefit. This results in a $3 million deduction, which lowers the taxable income for the LLC members.
The bill loosens TCJA restrictions around deducting net interest expenses and offers more flexibility to businesses with high interest costs.
Note: NOL carryforwards remain preserved. While there were no adjustments to carrybacks, carryforwards continue under modified rules consistent with TCJA.
Example: A midsize energy company takes on $100 million in debt to finance a new plant; previously limited interest expense deduction might clip loss claims. The revised OBBBA rules allow a higher deduction in earlier years when interest in a traditional loan is likely to be higher.
Example: A Philadelphia-based LLC with two members pays $90,000 in PA state and local taxes. With the raised cap, members can now deduct up to $40,000 on federal returns. Prior to the OBBBA, each member would be limited to a $10,000 SALT deduction on their individual federal tax returns.
The OBBA’s permanent increase to the estate tax exemption offers major relief for family-owned businesses planning generational transfers. Shielding more wealth from taxation helps preserve business continuity and prevents forced asset sales to cover estate tax liabilities.
The estate tax exemption is permanently raised to $15,000,000 per spouse. This allows for family-owned businesses more room to preserve wealth and continuity of ownership across generations.
Example: A second-generation family-owned manufacturing business valued at $29 million is passed from parents to their children. Under the higher exemption, a married couple can transfer up to $30 million tax-free, meaning the entire business can be passed without incurring estate tax. Prior to the OBBBA, much of the business could have been subject to up to 40% federal estate tax, potentially forcing the sale of business assets to cover the liability.
The bill phases out or repeals many clean energy credits introduced under the Inflation Reduction Act (IRA), increasing costs for businesses pursuing renewable energy or energy efficiency projects.
The OBBBA provides businesses with tax planning tools to optimize deductions, credits, and long-term strategy. These tools include enhanced depreciation, R&D incentives, expanded interest deductions, and estate planning.
Here are some strategies that your business should consider:
Liz Smith is a veteran practitioner with over 13 years of experience in public accounting, specializing in guiding businesses through every stage of their financial journey — from inception to dissolution. With a strong background in trust administration, tax planning, and compliance for pass-through entities, she brings a wealth of expertise to the table. She also has extensive managerial experience in project management, and hands-on experience with IRS controversy resolution. This background ensures her clients receive strategic, informed guidance to navigate complex financial landscapes.
