On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), a reconciliation package that includes a broad array of tax provisions affecting individuals, businesses and international taxpayers.
We want to highlight the key provisions and offer preliminary insights into how they may affect your tax planning. Please contact us at your earliest convenience to discuss your situation so we can develop a customized plan. We will continue to closely monitor any potential regulatory guidance as it’s developed from the IRS and update you accordingly.
These changes take effect over time, some as early as July 2025 while others not until 2028
Business Tax Provisions
QBI Deduction: The qualified business income (QBI) deduction is made permanent and the deductible amount for each qualified business would remain at 20%.
Bonus Depreciation: 100% expensing (bonus depreciation) for qualified property is restored for property placed in service after Jan. 19, 2025.
Sec. 179 Expensing: The maximum amount a business may expense for qualifying expenses is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.
R&E Expenditures: Immediate deduction of domestic research or experimental expenses paid or incurred in 2025 is allowed. However, research or experimental expenses attributable to research that is conducted outside the United States will continue to be capitalized and amortized over 15 years.
Excess Business Loss Permanency: The excess business loss limitation is made permanent, and the existing treatment of loss carryforwards is maintained.
Business Interest Deduction: The interest expense limitation is calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), rather than earnings before interest and taxes (EBIT).
FDII and GILTI: Beginning in 2026, the deduction percentage is reduced to 33.34% for foreign-derived intangible income (FDII) and 40% for global intangible low-taxed income (GILTI).
BEAT: The base-erosion and anti-abuse tax (BEAT) rate is increased from 10% to 10.5%.
Third-Party Network Transaction Reporting Threshold: Form 1099-K, Payment Card and Third Party Network Transactions, reporting reverts back to previous rules where reporting is required if transactions exceed $20,000 and the aggregate number of transactions exceeds 200.
Form 1099 Reporting Threshold: The information reporting threshold for payments for services increases to $2,000 in a calendar year (up from $600) in 2026, and the threshold amount will be indexed annually for inflation starting in 2027.
Renewed Opportunity Zones: Opportunity zones provisions are made permanent, but with several changes, including narrowing the definition of “low-income community.” The changes will generally take effect in 2027.
Clean Energy and IRS Credits: Several clean energy credits from the Inflation Reduction Act (IRA) are terminated.
