The tax landscape has just experienced a seismic shift with the passage of the “One Big Beautiful Bill” — officially known as the One Big Beautiful Bill Act (OBBBA). This sweeping legislation represents the largest tax reform package in recent history, delivering substantial relief to both businesses and individual taxpayers.
The centerpiece of this legislation is the restoration of 100% bonus depreciation for qualifying business property, effective for assets placed in service between January 19, 2025, and the end of 2029. This isn’t just another incremental tax adjustment — it’s a comprehensive overhaul that touches everything from business equipment purchases to family tax credits, designed to stimulate economic growth and provide immediate financial relief.
100% Bonus Depreciation: What’s Back and Why It Matters
The restoration of 100% bonus depreciation represents a massive win for businesses of all sizes. Under this provision, companies can immediately write off the full cost of qualifying business property rather than depreciating it over several years.
How It Works
The amended bonus depreciation provisions reinstate 100% first-year depreciation for qualified property acquired and placed in service after January 19, 2025, and before January 1, 2030. This means that if you purchase $100,000 worth of qualifying equipment, you can deduct the entire amount in the year of purchase, dramatically reducing your current-year tax liability.
Who Benefits Most
- Short-term rental (STR) owners & real estate professionals
- Small to medium-sized businesses looking to expand operations
- Capital-heavy industries such as manufacturing, construction, and transportation
- Service businesses investing in technology and equipment upgrades
- Real estate developers through special provisions for qualified production property
Other Depreciation & Expensing
The bill allows an additional first-year depreciation deduction equal to 100% of the adjusted basis of “qualified production property,” which includes nonresidential real property used in manufacturing. This accelerated write-off creates immediate cash flow benefits by reducing current-year tax obligations, freeing up capital for reinvestment and growth.
The Section 179 limit increased to $2.5M, up from $1.25M. This helps businesses and real estate professioinals offset even more of their income.
Business Tax Benefits: Key Wins for Owners and Entrepreneurs
The One Big Beautiful Bill extends far beyond depreciation, offering a comprehensive suite of business tax advantages:
Research & Development Expense Relief
The bill permanently restores immediate expensing for domestic research and development (R&D) expenses, with small businesses having gross receipts of $31 million or less able to retroactively expense R&D back to after December 31, 2021. This retroactive relief provides significant tax savings for businesses that have been capitalizing R&D expenses since 2022.
Additional Business Provisions
The One Big Beautiful Bill includes significant provisons for businesses including:
- The extension of the Qualified Business Income (QBI) Deduction which allows owners of pass-through entities and sole proprietors a 20% deduction for their business income and a broader phase-in and phase-out range. There is now a minimum deduction of $400 for taxpayers with at least $1,000 of QBI from an active trade or business.
- The Excess Business Loss Limitation was made permanent for noncorporate taxpoayers.
- The Business Interest Deduction permanently reinstates EBITDA for purposes of determining the business interest limitation, allowing for greater current deductions.
- ERC refund claims are now prohibited if requested after January 31st, 2024, even if the claim was previously filed timely.
- The Qualified Small Business Stock (”QSBS”) has increased the exclusion amount of gain recognition from the sale of qualified small business stock from $10 million to $15 million, indexed for inflation beginning in 2027. The exclusion amount will now be the greater of $15 million or 10x the basis in the stock. The amount of total gross assets a corporation may have in order for its stock to qualify as QSBS is increased from $50 million to $75 million for stock issued after the date of enactment, with the new limit subject to inflation adjustments beginning in 2027. For stock acquired after the enactment date, the holding period required to qualify for QSBS gain exclusion is reduced from five years to three years. A 50% exclusion becomes available after three years, increasing to 75% after four years, and reaching the full 100% exclusion after five years. The impact of these changes should be taken into account in determining whether a new venture should be organized as a C corporation.
Individual Tax Relief: What’s in It for You
The legislation provides substantial benefits for individual taxpayers across multiple categories:
No Taxes on Tips and Overtime
The bill eliminates taxes on tips, overtime pay, and provides tax relief for seniors, putting more money annually in Americans’ pockets. It includes above-the-line deductions for tips (up to $25,000 per individual) and overtime pay (up to $12,500 per individual or $25,000 for joint filers), with the deductions beginning to phase out when modified adjusted gross income levels exceed $150,000 (or $300,000 for joint filers). Notably, these deductions are temporary, in effect for tax years 2025-2028.
Enhanced Child Tax Credit
The Senate bill raises the Child Tax Credit to $2,200 per child for the 2025 tax year, with the credit increasing each year based on inflation thereafter. This enhanced credit affects more than 40 million families.
Made-in-America Vehicle Benefits
The legislation introduces interest deduction up to $10,000 for loans on new American-made vehicles from 2025 through 2028.
Senior Tax Relief
The bill introduces unprecedented financial relief for seniors through additional standard deduction provisions. Seniors (65+) will now have a $6,000 bonus deduction for years 2025-2028, phased out at higher income levels.
Charitable Deduction for Non-Itemizers
The bill permanently permits non-itemizers (i.e., taxpayers who claim the standard deduction) to take charitable deductions of up to $2,000 for joint filers ($1,000 for all other filers) beginning in the 2026 tax year.
Increased SALT Cap
The bill increases the SALT deduction cap from $10,000 to $40,000 for taxpayers with modified adjusted gross income below $500,000. The $40,000 cap will be adjusted for inflation starting with $40,400 in 2026 and increased by 1% annually through 2029, before reverting to $10,000 in 2030. Homeowners and those who itemize their deductions will benefit largely from this. The enhanced SALT deduction phases out at a rate of 20% beginning at income of $250,000 for single filers and $500,000 for joint filers, ensuring that the benefit is targeted toward middle and upper-middle-income taxpayers rather than the highest earners. This change largely benefits residents of blue states with higher state and local tax burdens, providing significant relief for taxpayers in states like New York, California, and New Jersey.
Increased Estate Tax Exemption to $15M Per Person
The lifetime gift and estate tax exclusions increase dramatically to $15 million for single filers (up from $13.99 million) and to $30 million for married couples filing jointly (up from $27.98 million). Going forward, these exclusions will be indexed for inflation, providing predictable growth in exemption amounts. Unlike previous temporary increases, the One Big Beautiful Bill Act enacts a permanent increase in the estate and gift tax lifetime exclusion amount for 2025 and later years. This permanence eliminates the uncertainty that previously plagued estate planning due to sunset provisions scheduled for December 31, 2025.
What This Means for You: Real-World Impact
The One Big Beautiful Bill creates immediate and substantial tax savings opportunities across the board. The major tax provisions are estimated to reduce federal revenues by $5.0 trillion between 2025 and 2034, indicating the massive scale of tax relief provided.
Key Timing Considerations
Many provisions take effect immediately or retroactively to the start of 2025, requiring a fresh look at estimated tax payments and year-end planning. The retroactive nature of R&D expense relief provides particular value for businesses that have been capitalizing these costs since 2022.
Temporary vs. Permanent Provisions
Temporary tax provisions including tax deductions for overtime and tipped income along with temporary expensing for structures would boost GDP from 2025 to 2028 before phasing out. This creates urgency for taxpayers to maximize benefits during the temporary provision periods.
Next Steps: What You Should Do Right Now
Given the magnitude of these changes and their retroactive and immediate effects, prompt action is essential:
Immediate Review Required
Advisors should model client-specific scenarios for cash flow, effective tax rates, and project timelines. The complexity and scope of these changes make personalized analysis crucial for maximizing benefits.
Business Planning Opportunities
- Re-evaluate asset purchases to take advantage of 100% bonus depreciation
- Review R&D expense treatment and consider retroactive opportunities
- Assess entity structure for optimal pass-through deduction benefits
- Plan equipment acquisitions before the 2030 expiration of bonus depreciation
Individual Tax Planning
- Maximize temporary provisions like tip and overtime deductions (2025-2028)
- Consider timing of major purchases for American-made vehicle deductions
- Review family tax situations to optimize enhanced child tax credits
- Plan senior-specific deductions if applicable
Professional Consultation Essential
The complexity of these changes, combined with their retroactive nature and varying expiration dates, makes professional tax guidance more valuable than ever. Schedule a comprehensive review to ensure you’re capturing all available benefits while remaining
