How the One Big Beautiful Bill Act Impacts Your Business: Key Takeaways for 2025 and Beyond
On July 4, 2025, President Donald J. Trump signed the One Big Beautiful Bill Act (OBBB) into law—marking a sweeping new chapter in federal tax policy. Designed to make many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent, OBBB also introduces a host of new deductions, credits, and rule changes that will directly impact business owners, nonprofit leaders, and back-office teams across the country.
Whether you operate in construction, manufacturing, professional services, or the nonprofit sector, it’s critical to understand what’s changing and how it could affect your day-to-day operations and long-term planning.
Let’s break down what matters most.
1. A Win for Pass-Through Businesses: Section 199A Made Permanent
The 20% deduction for qualified business income (QBI), originally set to sunset at the end of 2025, is now permanent. This is great news for sole proprietorships, partnerships, and S corporations, many of whom worried about losing this valuable tax break.
Additionally, OBBB introduces a minimum $400 QBI deduction for active business owners with at least $1,000 in income from a materially participated trade or business. It may not sound like much, but it’s another small way to reduce taxable income—especially helpful for newer or smaller ventures.
Who benefits? Family-owned businesses, subcontractors, service firms, and startups that file as pass-throughs.
2. Expanded Benefits for Investors in Small Businesses (Section 1202)
Thinking about forming or investing in a C Corporation? OBBB makes Section 1202 even more attractive. This section, which allows for the exclusion of capital gains on qualifying small business stock, has been expanded to offer tiered exclusions based on holding period:
- 50% exclusion for stock held at least 3 years
- 75% exclusion at 4 years
- 100% exclusion at 5 years
Plus, the lifetime exclusion limit has increased from $10 million to $15 million (after July 4, 2025), and the asset limit for qualifying small businesses was bumped to $75 million from $50 million (for stock issued after July 4, 2025).
Why it matters: If you’re forming a new C Corporation or restructuring an existing business, this could create significant future tax savings for both founders and early investors—especially relevant for growth-focused companies and startups in manufacturing, tech, or biotech.
3. More Flexibility in Business Interest Expense Deductions
Under the TCJA, businesses could only deduct interest expense up to 30% of adjusted taxable income (ATI). That ATI number used to include an add-back for depreciation and amortization, but that expired after 2021.
OBBB permanently restores the add-back for depreciation, depletion, and amortization—bringing back the more favorable EBITDA-based calculation for determining deductibility.
Example:
Under prior law, $100,000 of ATI with no add-back might limit a business to deducting only $30,000 in interest. With OBBB, the add-back increases ATI to $130,000—raising the deductible interest cap to $39,000.
Bottom line: This is a win for capital-intensive businesses that rely on equipment or leverage, including construction, real estate development, and manufacturing firms.
4. 100% Bonus Depreciation Is Back—and Permanent
If you’re investing in equipment or qualified commercial real estate (especially for manufacturing, agriculture, or chemical production), OBBB is on your side.
The bill permanently reinstates 100% bonus depreciation for property placed in service after January 19, 2025. Even better, there’s a new 100% deduction for certain commercial real estate used in qualifying industries, available through 2030.
Planning tip: Businesses eyeing capital expenditures should consider moving up timelines to maximize the benefit.
5. Expanded Section 179 Limits for Equipment and Software
Section 179 expensing now allows for up to $2.5 million in deductions, with a phase-out threshold of $4 million—both increased from 2024 limits.
This is a big deal for companies investing in machinery, software, or vehicles, as it offers more flexibility and faster cost recovery for those essential purchases.
6. Research & Development (R&D) Deductions Reinstated for Small Businesses
Small businesses with average gross receipts of $31 million or less (indexed for inflation) can now fully deduct domestic R&D expenses again. Better yet, they can retroactively apply this rule to costs incurred domestically between 2022–2024, potentially unlocking substantial refunds.
The IRS is expected to provide guidance soon on how to make the necessary elections.
Industries impacted: Technology, manufacturing, and firms involved in product or process innovation.
7. Corporate Giving Gets a New Floor
Corporate charitable contributions are now deductible only if they exceed 1% of taxable income, effective for tax years starting after 2025.
What to consider: This could impact larger donations or annual giving strategies. Companies will need to factor this new floor into year-end planning.
8. Auto Loan Interest Deduction Returns (With a Catch)
From 2025 through 2028, individuals can deduct up to $10,000 in interest on auto loans—but only if the vehicle was new, for personal use, and assembled in the U.S.
While this is mostly a personal tax perk, business owners buying cars for family or commuting may find value here. The deduction begins to phase out at $100K MAGI (single) or $200K (joint) and fully phased out at $150k MAGO (single) or $250k (joint).
9. Simplified Reporting: 1099-NEC Threshold Increased
The annual $600 threshold for filing Form 1099-NEC is increasing to $2,000 starting in 2026 (for 1099’s filed in 2027). This will reduce the reporting burden for businesses working with independent contractors or vendors.
Back-office teams rejoice! This change simplifies compliance and cuts down on paperwork for businesses working with independent contractors.
10. Notable Changes for Nonprofits
Tax-exempt organizations take note: OBBB expands the reach of the 21% excise tax on high compensation (for years after 2025), previously limited to the five highest-paid employees. Now, anyone earning over $1 million could trigger the tax for the organization.
Private colleges and universities also face higher excise tax rates (for years after 2025) depending on the value of their endowments per student, with new brackets ranging from 1.4% to 8%.
If you’re a nonprofit or higher ed organization, this is a good time to revisit executive compensation packages and investment policies.
11. Trump Accounts: A New Savings Vehicle for Children
OBBB introduces “Trump Accounts”, a type of tax-advantaged savings account for children under 18.
- The federal government contributes $1,000 at birth for babies born in 2025-2028.
- Parents and employers can make additional contributions (up to $5,000 and $2,500/year respectively).
- Funds become accessible at age 18 for education, first-time home purchases, or starting a business. If not used for these purposes, the account will be treated akin to an IRA.
Business angle: Employers may consider contributing to employee family accounts as a benefit. More guidance is expected from the IRS on setup and administration.
12. Opportunity Zones: Extended and Reimagined
OBBB breathes new life into the Opportunity Zone (OZ) program by making it permanent, eliminating the 2026 sunset date that would have ended the ability to defer gains. Starting in 2027, gains reinvested into Qualified Opportunity Funds (QOFs) receive a five-year deferral and a 10% reduction in the taxable amount—offering renewed value for business owners seeking to shelter gains from the sale of a business. Even better, investments in rural OZ projects may qualify for a 30% reduction. While this is great news long term, gains reinvested during the transition years (2025–2026) offer fewer benefits, so timing matters. A full redesignation of OZ census tracts is also coming in 2027, with stricter eligibility rules. If OZs have been part of your tax strategy—or could be in the future—it’s time to revisit the map and your investment timeline.
13. A Reminder on What’s Going Away
While many TCJA provisions are now permanent, OBBB eliminates several clean energy incentives:
- Energy Efficient Home Improvement Credit (gone after 2025)
- Residential Clean Energy Credit (gone after 2025)
- Clean Vehicle Credit (ends for vehicles acquired after September 30, 2025)
If you’re planning solar panels, heat pumps, or EV purchases—get moving.
Final Thoughts: What Should Business Owners Do Now?
OBBB represents one of the most significant tax overhauls in years. While it offers substantial opportunities for many mid-sized businesses, it also introduces complexity.
Now is the time to:
- Review your current year tax strategy with your CPA
- Revisit capital expenditure plans for 2025 and beyond
- Evaluate your charitable giving and compensation structures
- Prepare for IRS guidance, especially on tips and overtime
- Identify opportunities to amend prior-year returns (R&D or depreciation)
- Explore C Corp structures if you’re planning a future sale
At Lanigan Ryan, we’re already helping clients across industries navigate these changes. Whether you’re preparing your business for growth, succession, or just trying to make the most of this new tax environment, we’re here to help you plan smart and stay compliant.
Want Help Making Sense of OBBB for Your Business?
Let’s talk. Our team is ready to help you identify the key provisions that apply to your business and build a proactive plan for 2025. Call us at (301) 258-8900.
