The Major Business Tax Implications for the One Big Beautiful Bill Act (OBBBA)

By Elijah Long, CPA, Associate

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is one of the most significant tax reforms since the 2017 Tax Cuts and Jobs Act (TCJA). With many TCJA provisions set to expire at the end of 2025, OBBBA steps in to make several of them permanent, while also introducing new deductions, credits, and compliance rules.  

Whether you’re a business owner or an individual taxpayer, here’s what you need to know and what you should start preparing for as we head into the 2026 filing season.  

Restoration of Bonus Depreciation and Section 168(n)  

One of the most impactful provisions in the OBBBA for businesses is the permanent restoration of 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025.   

This change enables companies to immediately deduct the full cost of eligible assets, rather than depreciating them over time, which significantly improves cash flow and incentivizes capital investment.   

In addition to this restoration, OBBBA introduces a new elective 100% depreciation allowance under Section 168(n) for a special category of nonresidential real property known as qualified production property. To qualify, construction must begin after January 19, 2025, and before January 1, 2029, and the property must be placed in service by the end of 2030.   

Qualified Production Property  

The definition of qualified production property is nonresidential real estate used in specific production activities such as:   

• Manufacturing tangible personal property  
• Agricultural production  
• Chemical processing  
• Refining  

Importantly, the property must be directly tied to these production functions. Excluded spaces include property used for:  

• Offices  
• Administrative services  
• Lodging  
• Parking  
• Sales  
• Research  
• Software engineering  

Domestic Research & Development Cost Expensing 

Another benefit for businesses under the OBBBA is the permanent restoration of full expensing for domestic research and development (R&D) costs, reversing the TCJA-era requirement to amortize these expenses over five years.   

Beginning with tax years starting after December 31, 2024, domestic R&D costs can be immediately deducted under a newly created Section 174A, while the existing Section 174 is retained and amended to require continued 15-year amortization for foreign research costs. Notably, software development is now explicitly included in the definition of research under Section 174A.   

Taxpayers still have the option to elect the capitalization of domestic research costs, allowing for amortization over a period of at least 60 months, thereby offering flexibility for long-term planning.  

Implementation Paths for R&D Costs  

OBBBA provides three implementation paths.  

1. Default: By default, taxpayers will adopt the new rules through an automatic accounting method change on a cut-off basis.   
2. Claiming Unamortized Costs: Businesses may elect to claim any unamortized domestic research costs incurred in 2022, 2023, and 2024 either entirely in the first tax year beginning after 2024 or spread evenly over the first two tax years beginning after 2024.   
3. Small Businesses: For eligible small businesses—those meeting the gross receipts test under Section 448 (set at $31 million for 2025)—a separate transition rule allows amended returns to claim full expensing for pre-2025 tax years, retroactive to the year in question. This retroactive option is not available to tax shelters.  

Section 280C Amendment  

Additionally, OBBBA amends Section 280C to require coordination between the research deduction and the research credit. Specifically, taxpayers must reduce their Section 174A deduction by the amount of any research credit claimed or reduce the credit by an equivalent amount.   

This change, effective for tax years beginning after 2024, replaces the more lenient TCJA-era rule that allowed both the full amortization deduction and the full credit in many cases. Businesses should carefully evaluate how these changes affect their R&D tax strategy, especially in light of the new flexibility and potential for retroactive benefits.  

Qualified Small Business Stock (QSBS)  

The OBBBA significantly enhances the tax benefits associated with Qualified Small Business Stock (QSBS) under Section 1202, further incentivizing long-term investment in startups and emerging companies.   

For stock issued after the date of enactment, the law introduces a tiered capital gains exclusion system: taxpayers can now exclude 50% of the gain on QSBS held for at least three years, 75% for stock held for four years, and continue to enjoy the full 100% exclusion for stock held for five years or more.  

In addition to these holding period incentives, OBBBA increases the exclusion cap from the greater of $10 million or 10 times the taxpayer’s basis to $15 million, with indexing for inflation beginning in 2027. The bill also raises the gross asset threshold for a corporation to qualify as a small business from $50 million to $75 million, also indexed to inflation starting in 2027.  

Work with Maner on Business Tax Strategy for 2025 and Beyond   

While this article highlights many of the key provisions of the OBBBA for businesses, it only scratches the surface of the comprehensive legislation. There are additional updates, particularly in areas such as international tax and energy credits, that may significantly impact your planning and compliance strategies.  

If you have questions about how to prepare for the upcoming filing season, or if you’d like to discuss how specific provisions in OBBBA could affect your personal or business tax situation, we’re here to help. Reach out to Maner’s tax team at maner@manercpa.com to start a conversation. Whether you’re seeking clarity, strategy, or proactive planning, our experts can guide you through the changes and help you take the necessary steps to stay ahead.