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.

1. Permanent Deduction for Domestic R&D

Companies can now immediately deduct domestic research and development (R&D) expenditures incurred after December 31, 2024. This provision eliminates the need for amortization and restores the full deduction model, allowing businesses to recover R&D costs more efficiently.

Additionally, businesses with average gross receipts under $31 million may retroactively deduct R&D expenses that were capitalized between 2021 and 2024. All taxpayers engaged in domestic R&D can choose to accelerate remaining amortized deductions over one or two years.

2. Continuation of the PTET Workaround

The bill solidifies the pass-through entity tax (PTET) deduction, allowing partnerships, S corporations, and LLCs to continue deducting state and local taxes at the entity level. This provides ongoing relief from the SALT deduction cap for individual owners.

3. Increased Reporting Threshold for 1099s

The threshold for reporting income on Forms 1099-NEC and 1099-MISC will rise from $600 to $2,000 per year, adjusted for inflation after 2026. This reduces administrative burdens, particularly for businesses issuing smaller payments to freelancers and contractors.

4. Interest Expense Deductions Based on EBITDA

Beginning in tax year 2025, the limitation on business interest deductions will be based on EBITDA (earnings before interest, taxes, depreciation, and amortization), rather than EBIT. This change increases the allowable deduction for capital-intensive industries.

5. 100% Bonus Depreciation Reinstated

The bill reinstates 100% bonus depreciation for qualified property acquired and placed in service on or after January 19, 2025. This allows businesses to fully deduct the cost of certain capital investments in the year of acquisition.

6. Expanded Section 179 Expensing

Asset expensing limits have been increased, with the maximum deduction raised to $2.5 million, phasing out when property purchases exceed $4 million. This enhancement particularly benefits small and mid-sized businesses investing in equipment or technology.

7. Boosted Advanced Manufacturing Investment Credit

For property placed in service after 2025, the Advanced Manufacturing Investment Credit increases from 25% to 35%, incentivizing domestic production and industrial investment.

8. Permanent Opportunity Zone Incentives

The legislation permanently renews the Opportunity Zone program, encouraging long-term private investment in economically disadvantaged communities by offering tax incentives to investors.

9. Additional Industry-Specific Provisions

• Homebuilders benefit from an exception to the percentage-of-completion accounting method for certain residential construction contracts.

• Manufacturers and media companies may qualify for a special depreciation allowance for qualified production property, pending specific definitional guidance from the IRS.

Conclusion

The One Big Beautiful Bill delivers lasting tax benefits aimed at enhancing business growth, innovation, and domestic manufacturing. Companies should evaluate how these provisions affect their operations, capital expenditure plans, and entity structures. With many changes taking effect in 2025, now is the time to consult your tax advisors and realign strategies to take full advantage of these opportunities.