July 30, 2025

One Big Beautiful Bill Impacts U.S. Businesses: Key Corporate Tax Provisions Explained

Introduction

In July 2025, the U.S. government enacted sweeping tax reform through the One Big Beautiful Bill, designed to build upon and make permanent many provisions from the 2017 Tax Cuts and Jobs Act (TCJA). The legislation focuses on supporting American innovation, manufacturing, and small businesses through long-term tax relief and simplification. For business owners, CFOs, and corporate tax professionals, understanding the implications of this new law is essential for strategic planning. Below, we break down the most impactful corporate tax provisions in the bill and what they mean for your organization.

Key Corporate Tax Provisions

1. Permanent Deduction for Domestic R&D

Domestic research and development (R&D) expenditures incurred after December 31, 2024, are now fully deductible in the year incurred. This eliminates the amortization requirement, providing immediate tax relief and improving cash flow for companies engaged in innovation.

Businesses with average gross receipts under $31 million can retroactively deduct R&D expenses capitalized between 2021 and 2024. All taxpayers conducting domestic R&D can also accelerate remaining deductions over a one- or two-year period.

2. PTET Deduction Maintained

Pass-through entities—including partnerships, LLCs, and S corporations—can continue deducting state and local taxes at the entity level, bypassing the SALT deduction cap for individual owners.

3. Increased 1099 Reporting Threshold

The 1099-NEC and 1099-MISC reporting thresholds will increase from $600 to $2,000 per calendar year beginning in 2025, with adjustments for inflation after 2026.

4. EBITDA-Based Interest Deduction

For tax years starting after 2024, the limitation on interest expense deductions will be based on EBITDA rather than EBIT, increasing allowable deductions for capital-intensive businesses.

5. 100% Bonus Depreciation Restored

Qualified property acquired and placed in service on or after January 19, 2025, qualifies for 100% bonus depreciation, enabling businesses to fully expense the cost of capital investments in the year of purchase.

6. Higher Section 179 Expensing Limits

The maximum allowable Section 179 deduction increases to $2.5 million, with a phase-out starting at $4 million in qualifying property purchases.

7. Increased Advanced Manufacturing Investment Credit

For qualifying property placed in service after 2025, the credit increases from 25% to 35%, bolstering incentives for domestic production.

8. Permanent Opportunity Zone Program

The Opportunity Zone initiative, which offers tax incentives for investments in designated underserved areas, is now permanent—providing certainty for long-term investment planning.

9. Industry-Specific Provisions

The bill introduces targeted benefits for specific sectors, including a percentage-of-completion exception for certain residential construction contracts and a special depreciation allowance for qualified production property, with further guidance expected from the IRS.

Industries Poised to Benefit the Most

While the tax changes apply broadly, certain industries are particularly well-positioned to leverage these incentives:

Technology and Software Development

Creating new software applications, platforms, or improving existing functionalities.
Developing AI systems for applications in healthcare, customer service, or cybersecurity.
Advancing blockchain and digital asset technologies, including ledger systems, payment solutions, and decentralized applications.

Manufacturing and Engineering

Designing and developing new products, processes, or prototypes.
Enhancing manufacturing efficiency or sustainability through process improvements.
Innovating in materials science, mechatronics, or robotics applications.

Life Sciences and Pharmaceuticals

Developing new drugs, therapeutics, or medical devices.
Improving manufacturing methods, testing processes, or drug formulations.
Conducting clinical trials or providing contract research services to other companies.

These sectors are likely to see the greatest impact from permanent R&D deductions, expanded depreciation, and increased investment credits, all of which directly support innovation and capital investment.

Conclusion

The One Big Beautiful Bill represents a significant shift in U.S. corporate tax policy, providing permanent incentives for R&D, manufacturing investment, and community development. Businesses in technology, manufacturing, and life sciences stand to benefit disproportionately, but all companies should review their tax strategies to maximize these opportunities.

With most provisions taking effect in 2025, now is the time to work closely with tax advisors to align operational plans, investment strategies, and accounting methods with the new law. Proactive planning can ensure your business captures every advantage this legislation offers.