On July 4, 2025, the government passed a major new tax law called the One Big Beautiful Bill Act. This law introduces important changes that can help individuals and business owners save money on their taxes.
Below is a summary of the key tax provisions:
1. Depreciation & Expensing Provisions
Bonus Depreciation
- 100% bonus depreciation made permanent for qualifying property acquired on or after January 20, 2025.
- For real property, 100% depreciation applies to construction starting after January 19, 2025, and before January 1, 2029, and placed in service by December 31, 2030.
- Always check for state conformity
Section 179 Expensing (Small Business Expensing)
- Maximum expense limit increased from $1 million to $2.5 million.
- Phaseout threshold raised to $4 million for property placed in service after 2024.
- Amounts indexed for inflation starting in 2026.
- Always check for state conformity as not all states conform
2. Business Interest Deduction
- EBITDA-based limitation replaces the current EBIT-based limitation, allowing greater interest deductibility.
- Effective 2025 and made permanent.
- Revises ordering rules for the capitalization of interest.
3. Pass-Through Entities & Qualified Business Income
Qualified Business Income Deduction (QBI)
- The 20% QBI deduction is made permanent. No more sunsets!
- Phase-out thresholds increased, allowing more taxpayers to qualify.
- This will be a game changer with respect to mortgage pools considering a REIT structure as this deduction is permanent
Pass-Through Entity Tax (PTET) Elections
- No changes made to existing PTET deduction rules.
4. Charitable Contribution Deduction
- Businesses may deduct charitable contributions to the extent the contribution exceeds 1% and is ≤10% of taxable income.
- Carryforwards are allowed for:
- Amounts disallowed by the 10% cap.
- Amounts disallowed by the 1% floor (if arising from carryforwards under the 10% limit).
5. Qualified Opportunity Zone (QOZ)
- Capital Gains invested after January 1, 2027 can be deferred for up to five years
- Post-deferral gains held for 10+ years are fully tax-free (for up 30 years)
- States can redesignate zones every 10 years.
- New mandatory IRS Reporting
- 10% percent basis if investment held for five years.
6. Research & Development (R&D) Expensing
U.S.-Based R&D
- Immediate expensing for U.S. R&D expenditures made permanent (effective 2025). This was a previous point of contention as these costs were previously required to be capitalized, hampering the innovation that occurred domestically.
- There is retroactive relief for small businesses back to 2022.
7. State and Local Tax Deduction
- State and Local tax deduction limit on individual income tax returns increase from $10k to $40k.
- This increase is available from 2025 to 2029
- The deduction begins to phase out when income exceeds $500k ($250MFS). The deduction will never reduce below $10k.
The One Big Beautiful Bill Act opens new opportunities to save tax dollars especially if you own a business. Even if you’re an individual taxpayer, there are new benefits to keep more of your earnings.
If you want to learn how these changes apply to your situation or need help with tax planning or advice — we’re here to help. Contact us today to schedule your consultation with Duner and Foote.