The OBBB has tax breaks for businesses.
Business lobbying groups pushed Congress hard for certain expiring and expired business tax breaks to be restored and extended. They got their wish, thanks to enactment of the “One Big Beautiful Bill.”
We’ll focus on the key provisions here.
Let’s start with first-year bonus depreciation. Prior to 2023, businesses could deduct the full cost of qualifying assets with lives of 20 years or less. It was 80% in 2023, 60% in 2024 and 40% in 2025.
The OBBB fully revived the break to 100% for business assets first put in use after Jan. 19, 2025. And the break is permanent. This will help lots of firms. For example, if you buy a heavy SUV solely for business use, and you place the vehicle in service after Jan. 19, you can again deduct the full cost.
Section 179 expensing amounts increase. For 2025, $2.5 million of assets can now be expensed, and this limit begins to phase out once over $4 million of assets are placed in use during the year. Prior figures were $1.25 million and $3.13 million. There is an important rule when expensing business assets. The amount expensed can’t exceed the business’s taxable income. Bonus depreciation doesn’t have this rule.
Full expensing of domestic R&D costs is permanently restored. Before 2022, firms could expense their R&D costs in the year incurred. The Tax Cuts and Jobs Act changed this for post-2021 years, requiring businesses to amortize their R&D costs over five years…15 years for overseas research. The OBBB resuscitated the old rule only for domestic R&D. Note that businesses can elect amortization if they want.
Small firms get even more relief. Those with average annual gross receipts of $31 million or less for three years can make a small-business retroactive election to apply full expensing of their R&D costs to as far back as their 2022 tax returns. IRS Revenue Procedure 2025-28 has the details, including how to make the election.
The popular 20% qualified business income deduction is now permanent. Self-employed individuals, independent contractors, farmers, some landlords and owners of pass-through entities…such as partnerships, LLCs and S corporations… claim the 20% QBI write-off on line 13 of their Form 1040. QBI is one’s allocable share of income less deductions from a business. Special rules apply to filers with incomes greater than $394,600 for joint filers and $197,300 for others. This tax deduction, enacted in the TCJA, was slated to end after 2025, but the OBBB made it permanent. Tax pros hoped Congress would expand the deduction while negotiating the OBBB, but no such luck. Lawmakers essentially extended it as is, with a couple of tweaks.