Key Questions: What Are the Top 10 Provisions in the “One Big Beautiful Bill Act” That Will Impact Businesses?

The One Big Beautiful Bill Act was signed into law on July 4 by President Donald Trump. The bill extends many of the expiring provisions of the Tax Cuts and Jobs Act (TCJA). It also addresses many of Trump’s other tax priorities. Many of the provisions start after 2025.

1. New Sec. 1202 Qualified Small Business Stock (QBSB) exemption of $15 million per person – Now we can exempt a portion of the gain after three years, not just after five years. A 50% exclusion is available if held for three years, 75% exclusion if held for at least four years, and 100% if held for five or more years. The corporate asset cap increased from $50 million to $75 million.
2. Qualified Business Income (QBI) deduction – Keeps the deduction at 20%. Starting in 2026, it expands the deduction limit phase-in range for Specified Services Trades or Businesses (SSTBs) and other entities subject to the wage and investment limitation by increasing the $50,000 amount for non-joint returns to $75,000 and the $100,000 amount for joint returns to $150,000. The bill also introduces an inflation-adjusted minimum deduction of $400 for taxpayers who have at least $1,000 of QBI from one or more active trades or businesses in which they materially participate.
3. Permanent Excess Business Loss (EBL) Limitation – For 2025, EBLs are disallowed if trade/business deduction exceeds trade/business income plus $313,000 (or $626,000 MFJ), indexed annually starting in 2026. Loss must first clear the passive activity rules. For pass-through owners, this applies at the individual level.
4. Section 179 and bonus depreciation
   • Section 179 expensing – The maximum amount a taxpayer may expense under Sec. 179 is $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million.
   • Bonus depreciation – The bill permanently extends the additional first-year bonus depreciation. The allowance is increased to 100% for property acquired and placed in service on or after Jan. 19, 2025.
5. Research and development expenses – The bill allows taxpayers to immediately deduct domestic research or experimental expenditures paid or incurred in tax years beginning after December 31, 2024. However, research or experimental expenditures attributable to research that is conducted outside the United States will continue to be required to be capitalized and amortized over 15 years. Small business taxpayers with average annual gross receipts of $31 million or less will generally be permitted to apply this change retroactively to tax years beginning after December 31, 2021. And all taxpayers who made domestic research or experimental expenditures after December 31, 2021, and before January 1, 2025, will be permitted to elect to accelerate the remaining deductions for those expenditures over a one- or two-year period.
6. Special depreciation allowance for qualified production property – The bill allows an additional first-year depreciation deduction equal to 100% of the adjusted basis of “qualified production property.” Qualified production property is generally nonresidential real property used in manufacturing.
7. Limitation on business interest – The bill reinstates the earnings before interest, taxes, and amortization (EBITA) limitation for tax years beginning after December 31, 2024. Therefore, for these years, adjusted taxable income would be computed without regard to the deduction for depreciation, amortization, or depletion.
8. Excess business losses – The bill makes permanent the limitation on excess business losses of noncorporate taxpayers. It was scheduled to expire after 2028.
9. Clean Energy incentives – Many of the clean energy tax incentives were terminated.
   • Previously owned clean vehicle credit (terminates after September 30, 2025);
   • Clean vehicle credit (terminates for vehicles acquired after September 30, 2025);
   • Qualified commercial clean vehicle credit (terminates after September 30, 2025);
   • Alternative fuel vehicle refueling credit (terminates after June 30, 2026);
   • Energy-efficient commercial buildings deduction (terminates for property the construction of which begins after June 30, 2026);
10. Charitable deduction for corporations – Adds a 1% floor. Only contributions above 1% of taxable income are deductible, up to 10% limit.