Practical tax advice for businesses as a result of the OBBBA

Practitioners are always seeking proactive tax advice to provide to our clients or apply within our own businesses. At first glance, many of the business tax provisions in H.R. 1, P.L. 119–21, the law commonly known as the One Big Beautiful Bill Act (“the act”), appear to be a reinstatement of previous tax rules. Bonus depreciation and the current deductibility of research–and–development (R&D) costs have been restored, for example. However, the act offers many new and valuable opportunities encouraging a range of practical tax planning strategies. This article discusses several of them.

Using Sec. 163(j) to maximize the tax deduction for business interest expense

Owners often consider whether to borrow money to grow their business operations. A huge component of that decision is the deductibility of interest on the loans. Sec. 163(j) imposes a potentially significant limitation on the deductibility of such interest. The computation of that limitation has been modified by the act.

In 2017, as part of the Tax Cuts and Jobs Act (TCJA), P.L. 115–97, Congress significantly restricted the ability to deduct interest expense by businesses, enacting Sec. 163(j), which limits the deduction of business interest (generally, interest paid or accrued on debt properly allocable to a trade or business).¹ Over the years, there have been several changes to the computation of the Sec. 163(j) limit.

The limit on the deduction of business interest under Sec. 163(j) is the sum of:

1. The taxpayer’s business interest income for the tax year;
2. 30% of the taxpayer’s adjusted taxable income (ATI) for the tax year; and
3. The taxpayer’s floor plan financing interest expense for the tax year.²

The most significant change introduced by the act relates to item 2 above, how ATI is calculated.

From the enactment of Sec. 163(j) in the TCJA until 2021, any deduction allowable for depreciation, depletion, or amortization was excluded from the calculation of ATI for purposes of the limitation, effectively raising the limitation amount. However, for tax years starting after 2021, these items were included in calculating ATI. The act permanently restores the rule that applied before 2022. Effective for tax years beginning after Dec. 31, 2024, deductions for depreciation, depletion, and amortization are again excluded from the calculation of ATI.³ As a result, ATI will be higher in 2025 and later years for many businesses.

The following example shows the positive impact of the new and helpful provision:

Example 1: A C corporation has $1,500,000 of income after all deductions except those for depreciation, depletion, amortization, and interest. The corporation’s depreciation, depletion, and amortization is $300,000, and it paid interest to a bank on a business loan of $450,000. Assume the company has neither interest income for the year nor floor plan financing interest expense (i.e., items 1 and 3 of the business interest limitation described above do not apply).

Under the rule in effect immediately prior to the act, the interest deduction would have been calculated as shown in the table “Interest Deduction Before H.R. 1.”

Therefore, under this computation, the corporation cannot deduct all its interest in the current tax year. The $90,000 of nondeductible interest ($450,000 — $360,000) is carried forward to the subsequent year and treated as business interest paid in that year.⁴

Under the new rule, beginning in 2025, the interest deduction is calculated as shown in the table “Interest Deduction After H.R. 1.”

As seen in this example, the new law provides for a significantly larger deduction for interest paid. In this example, the change in the act allows for the full deduction of interest in the year incurred.

In the current year, tax planning discussions with clients who have significant debt or are planning to incur debt should include the impact of the new favorable provision. Calculations should reflect that deductions for depreciation, depletion, and amortization are no longer excluded when computing ATI. Showing clients the resulting increase in allowable business interest deductions can help them better understand the tax benefits of borrowing and improve their overall decision of how much debt to take on.

The revised calculation of ATI will have a significant impact on capital–intensive businesses that have substantial depreciation, depletion, and amortization expenses, notably, in combination with the act’s provisions increasing depreciation deductions, discussed later in this article. For clients planning to use debt to acquire new property, tax planning conversations should also address whether it would be more advantageous for the property to be purchased or leased.

It is important, however, to keep in mind that the limitation under Sec. 163(j) does not apply to a “small” business (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting). For 2025, a small business is one with average annual gross receipts for the three prior years that do not exceed $31 million.⁵ In addition, the business interest limitation does not apply to electing real property trades or businesses, which are excluded for purposes of Sec. 163(j).⁶

Consider using the new and improved benefits of QSBS

Often, business owners shy away from structuring as C corporations. Although the tax rate is a flat 21%, the effect of double taxation on a corporation’s dividends issued to shareholders can make the combined income tax rate prohibitively high.⁷

Sec. 1202, which provides a partial or full gain exclusion from the sale or exchange of qualified small business stock (QSBS), is a powerful tool for founders, investors, and employees in startups and ongoing businesses that should be strongly considered. However, QSBS can only be issued by a domestic C corporation. This provision has become especially attractive in the startup and venture capital space, as it rewards investment in innovation and entrepreneurship.

Prior to the act, the gain on the sale of QSBS was excluded 100% if the stock was issued on or after Sept. 28, 2010, and, among other requirements, the stock was held for at least five years before selling it.⁸ As a result of the act, opportunities exist to receive a partial exclusion on the gain in the sale if the stock is held for a shorter period.

Specifically, under the act, for stock acquired after July 4, 2025, if it is held for three years or more, the exclusion is 50% of the gain; if it is held for four years or more, the exclusion is 75% of the gain; and if it is held for five years or more, the exclusion remains at 100%.⁹ The gain that is not excluded under the three– and four–year holding periods is taxed at 28%.¹⁰ However, there is an overall limitation on the excludable gain. For stock acquired on or before July 4, 2025, the amount of excludable gain is limited to the greater of either $10 million or 10 times the basis of the stock sold. Under the act, for stock acquired after July 4, 2025, the $10 million component of the limitation is increased to $15 million, indexed for inflation beginning in 2027.¹¹

As with any tax provision that offers significant income tax savings, several requirements must be satisfied. One requirement is that the stock must be acquired from the corporation at its original issue (directly or through an underwriter) in exchange for money or other property (not including stock) or as compensation for services provided to the corporation; purchases on the secondary market do not qualify.¹² Also, for stock issued after July 4,2025, the issuing corporation must be a domestic C corporation with aggregate gross assets of $75 million (increased by the act from $50 million) or less at all times after Aug. 9, 1993, and before the issuance of the stock and immediately after the stock issuance.¹³The $75 million limit is indexed for inflation beginning in 2027.¹⁴The term “aggregate gross assets” is defined as the sum of cash and the aggregate adjusted bases of other property held by the corporation.¹⁵

Additionally, the corporation must meet the active–business requirement in Sec. 1202(e)(1), under which at least 80% of the value of the corporation’s assets must be used in the active conduct of one or more qualified trades or businesses, and the corporation must be an eligible corporation (i.e., a domestic corporation other than a domestic international sales corporation (DISC), former DISC, regulated investment company, real estate investment trust, real estate mortgage investment conduit, or cooperative).¹⁶

With these newly higher thresholds and shorter holding periods, new and existing businesses should strongly consider choosing C corporation status to take advantage of Sec. 1202. Even if an existing business is operating as a partnership, converting to a C corporation to take advantage of the Sec. 1202 benefit should be considered. The original issuance of the stock received from the corporation would be the date of conversion; as a result, the holding period of the stock for purposes of the QSBS exclusion would start on that date.¹⁷ In addition, the requirement that the entity’s aggregate gross assets must be $75 million or less would need to be met before the date of conversion, as the rule applies to the corporation and any of its predecessors.¹⁸ A significant benefit in a conversion from a partnership to a corporation is that, for purposes of computing the 10–times–basis limitation on the gain exclusion, the taxpayer’s basis is treated as the fair market value of the stock received at the time of incorporation.¹⁹

With the increased threshold and expanded benefits under Sec. 1202, consideration might also be given to terminating an S election to take advantage of the Sec. 1202 gain exemption. An S corporation cannot be treated as the original issuer of qualified stock.²⁰ One potential solution is to implement an F reorganization in accordance with Sec. 368(a)(1)(F). While the specific steps are beyond the scope of this article, the general result is a newly formed C corporation that would own a single–member limited liability company through which the business would operate. As part of this structure, the issuance of the stock by the new C corporation satisfies the original–issuance criteria, allowing for possible Sec. 1202 treatment.

Careful consideration must be given before deciding to terminate a passthrough entity so that Sec. 1202 could be utilized. One very significant offsetting item is that owners of partnerships and S corporations receive a step–up in basis for income earned, whereas C corporation shareholders do not. As a result, the ultimate gain on the sale of the stock of a flowthrough entity may be significantly lower than if the entity were a C corporation, thereby reducing the relative benefit of a C corporation structure. This may be particularly true in the case where gain from the sale of Sec. 1202 stock exceeds the exclusion limitation.

It is also important to be aware that some businesses are not eligible for the exemption of gain under Sec. 1202 because they are not engaged in qualified trades or businesses for purposes of the active–business requirement discussed above. Businesses that are not qualified trades or businesses include (but are not limited to) those in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, financial services, brokerage services, or any trade or businesses where the principal asset is the reputation or skill of one or more of their employees.²¹

Consider the expanded tax benefits for R&D expenses

Many businesses spend substantial funds on research and development of products, services, technologies, and processes. Such R&D costs are a common type of operating expenses for a business. R&D offers companies a way to improve how they do business and what they can offer customers. The industrial, technological, health care, and pharmaceutical sectors typically incur the highest degree of R&D expenses.

Prior to the act, the deductibility of R&D expenses was addressed entirely within Sec. 174. That section refers to the costs as “specified research or experimental expenditures” (SRE expenditures). The definition of such costs is contained in Regs. Sec. 1.174–2. In short, the term means expenditures incurred in connection with a taxpayer’s trade or business that represent R&D costs in an experimental or laboratory sense. SRE expenses could also include costs associated with developing software, as provided in Sec. 174(c)(3).

The act modified certain relevant definitions and made significant changes on both a prospective and retrospective basis. To understand the changes made by the act, some additional background is necessary. Before the TCJA, businesses could fully expense both domestic and foreign R&D. However, beginning with tax years starting after Dec. 31, 2021, a provision in the TCJA eliminated the ability to immediately deduct SRE expenditures under Sec. 174. Instead, businesses were required to capitalize and amortize domestic SRE expenditures over a five–year period and foreign SRE expenditures over a 15–year period.²² This shift in treatment had a significant impact on many businesses’ bottom line. There were many complaints in both the public and private sector that the mandatory capitalization and amortization significantly reduced the current benefit of incurring significant R&D costs.

With the passage of the act, the mandatory capitalization of all R&D expenses has been repealed. The legislation creates new Sec. 174A, under which taxpayers can deduct R&D expenses in the year incurred or capitalize and amortize them over a period of no less than 60 months.²³ Sec. 174A is effective for expenditures paid or incurred in tax years beginning after Dec. 31, 2024. It is important to note that, while domestic R&D expenditures can now be fully expensed in the year incurred, foreign R&D costs must continue to be capitalized and amortized over a 15–year period.²⁴

The act provides that the changes made with the introduction of Sec. 174A will be treated as a change in method of accounting made with the IRS’s consent. These changes are applied on a cutoff basis applying to tax years beginning after Dec. 31, 2024, and no adjustments under Sec. 481(a) are to be made.²⁵

In addition to restoring the ability to fully expense domestic R&D expenditures in the year they are paid or incurred, the act also provides some businesses the option to retroactively deduct previously capitalized R&D expenditures incurred in tax years 2022, 2023, and 2024.²⁶ It is important, however, to realize that to the extent that a Sec. 41 R&D credit is taken on a tax return, the deduction for R&D expenses is reduced by the amount of the credit.²⁷

For small businesses, defined as those with average gross receipts of $31 million or less over the prior three years for the first tax year beginning after Dec. 31, 2024 (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting), the new law provides two options to recover the unamortized portion of previously capitalized domestic R&D expenditures from tax years 2022 through 2024:²⁸

• Option 1: Amend previously filed returns for 2022, 2023, and 2024, electing to retroactively apply Sec. 174A, and deduct the remaining unamortized amounts in the year they were paid or incurred.
• Option 2: Deduct any remaining unamortized domestic R&D expenditure amount in tax year 2025, or deduct it ratably over the 2025 and 2026 tax years. This option is considered an accounting method change and requires the filing of Form 3115, Application for Change in Accounting Method, on a cutoff basis.

Option 1 can be great for businesses that want to recover refunds as quickly as possible. The elimination of the Sec. 174 expense deduction had a significant impact on businesses’ tax liability and cash flow. As a result of the change, it was not uncommon for businesses to incur tax liabilities higher than expected due to the fact that R&D expenses were required to be amortized. Option 2 is good if businesses would like to avoid the administrative burden of amending returns. If the entity taking the R&D deduction is a partnership or an S corporation, the owners’ returns must be amended to receive the benefit of the additional deduction. In addition, filing an amended return gives the IRS another opportunity to examine it.

Example 2. Impact of the retroactive change: ABC meets the requirements to be a “small business.” In 2024, the company incurred $3 million in qualified domestic R&D expenses. On the company’s 2024 tax return, an amortization deduction of $600,000 ($3 million divided by five years) was taken to reduce taxable income. Under the act, the business can now retroactively elect to fully expense its R&D in 2024 by amending its 2024 tax return and claiming a deduction for the entire $3 million expense.

Under the facts in Example 2, if ABC were not a small business, it could elect to deduct its remaining unamortized domestic R&D expenditure amount of $2,400,000 from 2024 in 2025, or over two years, 2025 and 2026. However, making this election will be considered a change in accounting method, and filing Form 3115 on a cutoff basis will be required. As a result, there will not be an annual adjustment to income under Sec. 481(a).

On Aug. 28, 2025, the IRS issued Rev. Proc. 2025–28, which contains much guidance on taking advantage of the new rules with regard to R&D expenditures. The revenue procedure’s details are beyond the scope of this article. However, one item of note is that if a small business is amending prior–period returns to take advantage of the deductibility of these expenses, the returns must be filed by the earlier of July 6, 2026, or the due date for filing a claim for credit or refund (the date that is three years from the time the return was filed).²⁹

It is clear that the new favorable treatment of R&D is a strategic opportunity for businesses that invest in innovation.

Take advantage of the revised and accelerated depreciation deductions

There are many significant tax planning opportunities regarding the acquisition of capital assets in the act. Specifically, it raised the limit for the Sec. 179 deduction in a given year and reinstated 100% bonus depreciation. A review of the act’s provisions reveals several planning opportunities that may help taxpayers maximize the potential tax benefits of these changes.

Deduction under Sec. 179

Sec. 179 allows taxpayers to deduct the full cost of qualifying capital acquisitions in the year of purchase, in lieu of recovering the cost over time through depreciation. The act increased the annual maximum Sec. 179 deduction amount from $1.25 million to $2.5 million.³⁰ However, the amount of the deduction begins to phase out dollar for dollar when a taxpayer’s total eligible purchases exceed $4 million in a year.³¹ Thus, the deduction fully phases out once a taxpayer’s purchases reach $6.5 million. The increased thresholds and higher deduction limitation are effective for purchases made after Dec. 31, 2024.

Example 3: In 2025, a business purchases $4.5 million of property that qualifies for the Sec. 179 deduction. The business’s Sec. 179 deduction is $2 million: $2.5 million less $500,000.

Deduction under bonus depreciation

Before the enactment of the act, the bonus depreciation rules under Sec. 168(k) allowed for an immediate deduction of 40% of the cost of eligible property placed in service in 2025. However, as a result of the act, taxpayers may now deduct the full cost of eligible property in the year of acquisition, for property acquired after Jan. 19, 2025, effectively returning the 100% bonus depreciation that had been in effect for property placed in service in 2022, before it stepped down annually by increments of 20 percentage points. It should be noted that to qualify under the new rules, there must be no written binding agreement in effect for the acquisition of the property before Jan. 20, 2025.³²

Comparing the provisions for tax planning

The act expanded the Sec. 179 and bonus depreciation provisions to stimulate economic growth and encourage business investment. The modifications to both provisions can provide significant tax savings. At first glance, both provisions appear similar, as each allows for an immediate deduction for capital assets in the year of acquisition. However, these two tax benefits can be used together in the same year, providing taxpayers with additional opportunities to optimize their deductions. Thus, the critical question for practitioners is how to strategically utilize the specific provisions of both Code sections to maximize tax savings.

In each case, it is essential to understand the financial results of the business, the type of assets being acquired, and the owners’ preference for taking an immediate deduction, as opposed to spreading the deduction over multiple years.

Furthermore, understanding the specific advantages and limitations of both the Sec. 179 deduction and bonus depreciation is crucial for properly advising clients and maximizing their tax savings. One notable limitation of the Sec. 179 deduction is that the deduction cannot exceed the taxpayer’s total taxable income derived from its active conduct of any trade or business during the tax year.³³ In calculating the taxable income (or loss) of an actively conducted trade or business of a partnership, guaranteed payments to partners are not taken into account. In calculating the taxable income (or loss) of an actively conducted trade or business of an S corporation, compensation paid to shareholder–employees of the S corporation is not taken into account.³⁴ Another significant limitation of a Sec. 179 deduction, as discussed above, is the dollar limitation on the deduction and the phaseout of the deduction once certain purchase amounts are reached.

That said, a Sec. 179 deduction offers a distinct advantage over bonus depreciation by allowing business owners to choose the specific dollar amount to deduct in the given year. It is applied on an asset–by–asset basis.³⁵ In contrast, bonus depreciation must be applied to all assets within a specified class life placed in service during the year.³⁶

As 2025 winds down, it is vital for businesses to evaluate the most advantageous approach to using these two provisions. Businesses, even if they are not traditionally capital–intensive, need to review their potential capital acquisitions for the remainder of 2025. As a result of the changes from the act, there may be a stronger incentive to invest in additional capital assets before year end.

Previously, under the old law, the reduced bonus depreciation percentage may have discouraged some businesses from using this provision. However, with the restoration of 100% bonus depreciation under the act, year–end planning takes on renewed importance. As 2025 comes to a close, projections should be computed for both estimated tax payments and anticipated tax liabilities for the current and following tax years. With this new perspective on capital acquisitions, many taxpayers may find that their 2025 tax liability is substantially lower than originally projected prior to the enactment of the act.

One key consideration when calculating 2025 projections for capital improvements is how depreciation provisions are treated in the states where the business will file tax returns. While certain states conform to the federal treatment of the Sec. 179 deduction, many do not conform to federal bonus depreciation — particularly with the reinstatement of 100% federal bonus depreciation. Projections should account for federal and state tax impacts, factoring in which federal deductions are accepted by each state. In many cases, states will require significant addbacks for 100% bonus depreciation and allow only an offsetting smaller deduction under the state’s own depreciation provisions.

Another valuable planning consideration as a result of the more favorable depreciation rules is the use of cost segregation studies. Particularly effective in the real estate sector, a cost segregation study reclassifies certain nonstructural components of a building into shorter–lived property. The reclassified assets often qualify for both Sec. 179 and bonus depreciation, depending on their assigned class lives. The resulting increase in depreciation deductions can reduce federal taxable income, thereby improving cash flow and providing additional capital for potential growth.

Qualified production property

Finally, of note for maximizing depreciation, the act adds Sec. 168(n), which establishes a new category of property eligible for 100% bonus depreciation — qualified production property (QPP). The new provision offers a significant tax benefit to taxpayers investing in qualified manufacturing, production, or refining facilities in the United States.

QPP is defined as any portion of nonresidential real property that meets the following criteria:

• It is an integral part of a qualified production activity;
• It is placed in service in the United States (or a U.S. possession);
• The original use of the property commences with the taxpayer;
• The construction of the property begins after Jan. 19, 2025, and before Jan. 1, 2029;
• It is placed in service before Jan. 1, 2031; and
• The taxpayer makes an election to treat the property as QPP.³⁷

The term “qualified production activity” means the manufacturing, production, or refining of a qualified product.³⁸ The term “qualified product” means any tangible personal property that is not a food or beverage prepared in the same building as a retail establishment in which such property is sold.³⁹ The activity must also result in a substantial transformation of the property comprising the product.⁴⁰

QPP does not include the portion of any nonresidential real property that is used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to the manufacturing, production, or refining of tangible personal property.⁴¹ QPP also does not include any property to which the alternative depreciation system under Sec. 168(g) applies.⁴²

This provision could be especially significant in 2025 and beyond for companies considering the expansion of production facilities. Where there may have previously been consideration to expand operations overseas, this new provision shifts the focus toward manufacturing in the United States. Businesses should evaluate whether investing in U.S.-based facilities makes sense for their business and understand that making the required election allows them to fully benefit from the deduction for the full cost of domestic manufacturing facilities.

In short, all revised and expanded depreciation rules under the act present an opportunity to receive a substantial deduction in the year of QPP acquisition and should be used strategically to minimize taxes.

The QBI deduction lives on

The highest federal corporate tax rate for 2025 is 21%, compared with the top federal individual tax rate of 37%. This disparity is somewhat mitigated by the Sec. 199A qualified business income (QBI) deduction introduced by the TCJA, which allows for a deduction of up to 20% of QBI for taxpayers other than C corporations (e.g., S corporations, partnerships, and sole proprietorships). The deduction was set to expire on Dec. 31, 2025, but the act made it permanent,⁴³ a fact that should be a significant factor in choosing a business’s appropriate entity classification.

The QBI deduction is also enhanced for 2026 and onward, with higher income thresholds and a guaranteed minimum deduction. However, a group of businesses cannot benefit from the QBI deduction if their owners’ income exceeds a specified limit. Careful analysis may reveal that some businesses typically considered excluded may qualify. The improved QBI deduction for 2026 and beyond requires a thorough examination of a business’s operations to maximize eligibility.

The excluded group is referred to as specified service trades or businesses (SSTBs). SSTBs include trades or businesses involving the performance of services in the following fields: health; law; accounting; actuarial science; performing arts; consulting; athletics; financial services; brokerage services; investing and investment management; trading or dealing in securities, partnership interests, or commodities; and any trade or business of which its principal asset is the reputation or skill of one or more of its employees.⁴⁴

Rather than too hastily categorizing a business as an SSTB, however, advisers should review Regs. Sec. 1.199A–5 in each situation for nuances and exceptions. For example, the performance of services in the field of health does not include the operation of health clubs or health spas that provide physical exercise or conditioning to their customers.⁴⁵ Even though these facilities may be crucial to their patrons’ health, their business is not considered to be in the health field for purposes of determining whether they qualify as an SSTB. Similarly, while the practice of law is considered an SSTB, many of the services provided to law firms are not. For instance, companies providing printing, delivery, or stenography services to law firms are not considered to be providing services in the field of law and are not classified as SSTBs.⁴⁶

The regulations include many more examples of businesses that one might assume to be an SSTB but in fact are not. One involves an outpatient medical facility that engages doctors as contractors for procedures performed in the facility. The facility charges patients only a fee for use of the facility, while the doctors bill the patients directly for their services. In this case, the facility itself is not considered to be performing services in the field of health and thus is not an SSTB.⁴⁷

The QBI deduction is calculated at the shareholder, partner, or sole–proprietor level. As noted earlier, even if a business is classified as an SSTB, the owners may still qualify for the QBI deduction if their taxable income falls below a threshold amount, which is indexed yearly for inflation.⁴⁸ For 2025, the inflation–adjusted threshold amount is $394,600 for married taxpayers filing jointly and $197,300 for all other taxpayers.⁴⁹ For owners with taxable income in excess of the threshold amount, the QBI deduction is limited. For 2025, the limitation phases in over a fixed range of taxable income of $100,000 for married taxpayers filing jointly and $50,000 for all other taxpayers.⁵⁰ 

However, starting in 2026, the act increased the phase–in range for the QBI deduction limitation for SSTB owners to $150,000 above the inflation–adjusted threshold amount for the year for married taxpayers filing jointly and to $75,000 above the inflation–adjusted threshold for the year for all other taxpayers.⁵¹ Therefore, for 2026 and beyond, tax planners should not automatically assume that SSTB owners are ineligible for the QBI deduction. A careful review of each taxpayer’s facts and circumstances and proper computation will be essential.

The income thresholds and limitation phase–in ranges discussed above also apply when calculating the QBI deduction for businesses that are not SSTBs. Specifically, the thresholds and phase–in ranges are used in determining whether the deduction will be limited based on (1) W–2 wages or (2) W–2 wages and the unadjusted basis of qualified property (wage and property limitations).⁵² With the increased phase–in ranges under the act for the wage and property limitations, taxpayers may benefit from larger QBI deductions.

As an added benefit, the act introduces a minimum QBI deduction of $400, provided that a taxpayer’s total qualified business income from all qualified trades or businesses for the tax year is at least $1,000.⁵³

With the QBI deduction now made permanent by the act, the 20% deduction should be considered annually in tax planning for all passthrough businesses. A thorough review of business activities to confirm whether the business is an SSTB remains critical in order to fully benefit from the deduction.

Opportunities abound

Think the OBBBA is just a reinstatement of tax laws that are “old and cold”? That there is not much to it, and it will not help business save valuable tax dollars? That view completely misses the mark. Chances abound to help businesses save in the current and future years and even retroactively to prior years. A careful reading of the provisions will reveal a long list of opportunities in the areas covered here and beyond.

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Contributors

Alaina Gargano, CPA, is a tax manager; Alik MacLauchlan, E.A., is a senior tax manager; and Lewis Taub, CPA, is a tax director, all in the New York City office of Berkowitz Pollack Brant Advisors + CPAs. For more information about this article, contact thetaxadviser@aicpa.org.

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Footnotes

¹Sec. 163(j)(5).

²Sec. 163(j)(1).

³Sec. 163(j)(8)(A)(v).

⁴Sec. 163(j)(2).

⁵Sec. 163(j)(3).

⁶Sec. 163(j)(7).

⁷Sec. 11(b).

⁸Sec. 1202(a)(4).

⁹Sec. 1202(a)(5).

¹⁰Sec. 1(h)(4)(A)(ii).

¹¹Secs. 1202(b)(4) and (5).

¹²Sec. 1202(c)(1)(B).

¹³Sec 1202(d)(1).

¹⁴Sec. 1202(b)(4).

¹⁵Sec. 1202(d)(2).

¹⁶Sec. 1202(e)(4).

¹⁷Sec. 1202(i)(1)(A).

¹⁸Sec. 1202(d)(1)(A).

¹⁹Sec. 1202(i)(1)(B).

²⁰Secs. 1202(c)(1) and (d)(1).

²¹Sec. 1202(e)(3).

²²Sec. 174(a), prior to H.R. 1.

²³Secs. 174A(a) and (c).

²⁴Sec. 174.

²⁵P.L. 119-21, §70302(c).

²⁶P.L. 119-21, §70302(f).

²⁷Sec. 280C(c)(1).

²⁸P.L. 119-21, §70302(f).

²⁹Rev. Proc. 2025-28, §3.03(3).

³⁰P.L. 119-21, §70301.

³¹Sec. 179(b)(2).

³²Sec. 168(k); P.L. 119-21, §70301(c).

³³Sec. 179(b)(3).

³⁴Regs. Secs. 1.179-2(c)(2) and (c)(3).

³⁵Sec. 179(c)(1).

³⁶Sec. 168(k)(7).

³⁷Sec. 168(n)(2).

³⁸Sec. 168(n)(2)(D).

³⁹Sec. 168(n)(2)(F).

⁴⁰Sec. 168(n)(2)(D).

⁴¹Sec. 168(n)(2)(C).

⁴²Sec. 168(n)(4)(B).

⁴³P.L. 119-21, §70105.

⁴⁴Sec. 199A(d)(2).

⁴⁵Regs. Sec. 1.199A-5(b)(2)(ii).

⁴⁶Regs. Sec. 1.199A-5(b)(2)(iii).

⁴⁷Regs. Sec. 1.199A-5(b)(3)(iii), Example (3).

⁴⁸Sec. 199A(e)(2).

⁴⁹Rev. Proc. 2024-40, §3.27.

⁵⁰Sec. 199A(b)(3)(B)(i)(l), before amendment by the act.

⁵¹Sec. 199(b)(3)(B)(i)(l), after amendment by the act.

⁵²Sec. 199A(b)(2)(B).

⁵³Sec. 199A(i), after amendment by the act.

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MEMBER RESOURCES

Article

Nevius, “Tax Provisions in the One Big Beautiful Bill Act,” The Tax Adviser (July 7, 2025)

Tax Section resources

H.R. 1 resource center

Effective dates of tax provisions in H.R. 1

H.R. 1 — Tax provision summary and insights