3–4 minutes

OBBBA – Business Key Provisions

Big changes are coming to the business tax landscape. The One Big Beautiful Bill Act (#OBBBA), signed into law on July 4, 2025, reshapes how businesses large and small think about deductions, credits, and long-term planning. From a new twist on the Qualified Business Income deduction to enhanced expensing and updated reporting thresholds, this law touches nearly every corner of the tax code. If you own or manage a business, these updates could directly affect your bottom line starting in 2025 and reshape how you prepare for the years ahead. Let’s take a clear look at what’s changing and why it matters.

This is part 2 of 3 part series on OBBBA and outlines the Business Key Provisions. For Individual Key Provisions and Energy Key provision refer to part 1 and part 3 respectively.

  1. Sec. 199A, Qualified Business Income deduction (QBI)
    • Creates a minimum QBI deduction effective 2026
    • Deduction is the greater of regular §199A calculation, or $400
    • The bill raises the income range where limits on the QBI deduction phase in.
      • From $50,000 → $75,000 (single filers)
      • From $100,000 → $150,000 (married filing jointly
  2. Pass-through entity tax (PTET) SALT deduction
    • Individual SALT deduction is $40,000 for most filers. Additionally, there would be no SALT limitation for pass-through entities.
  3. Sec. 461(l), Excess business loss (EBL) limitation
    • Makes the Sec. 461(l) EBL limitation permanent, and retains the existing treatment of EBL carryforwards.
  4. Employer-provided childcare credit 
    • Increases the credit to 40% (50% for small businesses); max credit $500,000 ($600,000 for small businesses); inflation adjusted.
    • Effective 2026.
  5. Form 1099 information reporting 
    • Increases the information reporting threshold for certain payments to persons engaged in a trade or business and payments of remuneration for services to $2,000 in a calendar year (from $600), with the threshold amount to be indexed annually for inflation in calendar years after 2026.
    • Effective 2026.
  6. Form 1099K Reporting
    • $20,000 and more than 200 transactions
    • Effective 2025 onwards.
  7. Paid Family and Medical Leave Credit
    • Was set to expire after 2025. Extends and enhances credit.
  8. Research and experimental (R&E) expensing
    • Deduction: Domestic research/experimental expenditures fully deductible in the year paid or incurred.
    • Definition: Expenditures must be domestic (exclude foreign research)
    • Amortization option:
      • Taxpayer can elect to capitalize domestic research costs and amortize over ≥60 months starting when benefits are first realized.
      • Election must be made by the tax return deadline (including extensions)
      • Method and period elected must be consistently applied in computing taxable income.
    • Software development: Costs for developing software count as research or experimental expenditures.
  9. Bonus depreciation 
    • Permanently extends and modifies additional first year depreciation deduction. Allowance increased to 100% of property acquired and placed in service on or after Jan. 19, 2025.
    • Special Depreciation Allowance for Qualified Production Property
      • 100% bonus depreciation for “qualified production property” meeting specific criteria:
      • Nonresidential real property used in manufacturing/production activities
      • Construction begins Jan 19, 2025 – Dec 31, 2028, placed in service before Jan 1, 2031
      • Exclusions: Office space, administrative, lodging, parking, sales, research, software, engineering unrelated to production.
      • Recapture rule: If property ceases to be used in qualified production within 10 years, Sec. 1245 recapture applies.
      • Treatment: Qualified production property treated as Sec. 1245 property.
      • Effective Date: Property placed in service after enactment.
  10. Sec. 179, Enhanced Small Business Expensing 
    • Increases the maximum amount a taxpayer may expense under Sec. 179 to $2,500,000 and increases the phaseout threshold amount to $4,000,000.
    • Effective 2025
  11. Sec. 1202, Qualified small business stock exclusion 
    • Modifies the QSBS exclusion to provide a tiered exclusion determined on the years the taxpayer holds the QSBS:
    • 50% exclusion if held for three years;
    • 75% exclusion if held for four years; and
    • 100% exclusion if held for five or more years.
    • The bill also increases eligibility for the exclusion by increasing the eligibility limit on the corporation’s aggregate gross assets at the time of issuance from a $50 million limit to a $75 million limit.
    • Effective for stock acquired after July 4, 2025.
  12. Tip credit 
    • Expands credit to include beauty service industry starting in 2025.
  13. Charitable deduction for corporations
    • Adds 1% floor: only contributions above 1% of taxable income are deductible, up to 10% limit.
    • Effective 2026.

The One Big Beautiful Bill Act introduces sweeping changes that will impact businesses of all sizes from enhanced expensing and bonus depreciation to new thresholds for reporting and credits that reward childcare and research investments. These provisions aren’t just technical updates; they represent strategic opportunities for businesses to optimize tax positions and plan for growth. Understanding these changes now will help you stay compliant and competitive in the years ahead.

Disclosure: This material has been prepared for informational purposes only. It is not intended as a substitute for personalized professional advice. You should consult your own tax advisors or contact us if you need help with implementing any ideas shared on this page.