Income Tax Help: 5 New Tax Law Changes for businesses

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 five 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.

Firms can fully deduct the cost of manufacturing production facilities, including real property that would otherwise have to be depreciated over 39.6 years. This new 100% depreciation deduction for qualified production property is temporary, and the statute has lots of caveats, exceptions and guardrails to help prevent abuse.

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.

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. The OBBB resuscitated the old rule only for domestic R&D.

The popular 20% qualified business income deduction is now permanent. Self-employed individuals, independent contractors, farmers, some landlords and owners of pass-through entities claim the 20% QBI write-off on line 13 of their Form 1040. This tax deduction, enacted in the TCJA, was slated to end after 2025, but the OBBB made it permanent.