Accounting

The One Big Beautiful Bill: Highlights for Business Owners

Effective business planning requires tax certainty; however, frequent sunsets and cliffs in the tax code make future liabilities difficult to predict.

By Stephanie Dominguez, CPA, WilkinGuttenplan On Jan 20, 2026

With the passage of the One Big Beautiful Bill Act (OBBBA), major tax changes aimed at business investment and growth have become permanent law.

Depreciation and Expensing

The law restores 100% bonus depreciation, meaning businesses can deduct the entire cost of eligible assets immediately rather than depreciating them over time. This applies to assets placed in service after Jan. 19, 2025, replacing the previously scheduled phase-down (40% in 2025, 20% in 2026, and expiration after 2026).

A new category of property, qualified production property (QPP), was created for certain manufacturing, agricultural, chemical or refining facilities. Buildings and related structures that meet the QPP criteria and are placed in service after July 4, 2025, and before Jan. 1, 2031, may now be fully expensed.

The Section 179 expensing limit increased from $1 million to $2.5 million, with a phase-out beginning at $4 million in total qualifying purchases. These changes apply to tax years beginning after Dec. 31, 2024. Businesses can use a combination of Section 179 and bonus depreciation to maximize benefits for both Federal and state tax purposes.

Research and Development (R&D)

OBBB permanently reinstates immediate expensing for domestic research and experimental expenditures, including software development costs. Businesses may deduct these costs in full in the year incurred for tax years beginning after Dec. 31, 2024. Foreign research activities remain subject to amortization.

Pass-Through Income and Qualified Business Income (QBI)

For owners of sole proprietorships, partnerships and S corporations, the QBI deduction under Section 199A has been made permanent. The provision allows a 20% deduction on qualifying income.

A new minimum deduction allows taxpayers with at least $1,000 of QBI to claim a minimum $400 deduction, indexed for inflation.

Business Interest Deduction (Section 163(j))

Under prior law, the deduction for business interest expense was limited to 30% of adjusted taxable income (ATI). The OBBBA permanently modifies the ATI calculation to include depreciation, amortization, and depletion; thereby increasing the allowable interest deduction for many businesses.

Qualified Small Business Stock (QSBS)

The OBBBA expands QSBS benefits, allowing small business owners to potentially exclude gain from the sale of stock. The major changes include the introduction of a tiered exclusion for stock held for a minimum of three years, an increase in the per-issuer exclusion cap, and an increase in the gross asset threshold for corporations to qualify.

Real Estate and Energy Provisions

The legislation extends the Opportunity Zone program and creates new zones for investment. The OBBBA also introduces new rural investment zones to encourage capital investment and job creation in designated areas. These provisions allow potential deferral of capital gains and up to $10,000 of ordinary income. The new program has no specific end date, unlike the prior version.

The bond financing threshold for developers seeking low-income housing tax credits was amended so that developers only need to finance 25% of a project. The law also increases the state housing credit allocation by 12%. Many energy credit provisions are phased out, including those for new wind and solar facilities.

Business owners should review capital spending plans, R&D activities, and financing strategies with a qualified tax professional to ensure compliance and take advantage of benefits under the new law. Understanding these provisions early can help businesses align tax planning with long-term growth and investment goals.

About the Author: Stephanie Dominguez, CPA, is a senior manager with WilkinGuttenplan. She can be reached at [email protected].

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