The IRS has opened the 2026 filing season, and if you are preparing to file your 2025 business or individual tax return, you need to understand that the rules have shifted significantly. The One, Big, Beautiful Bill Act, signed July 4, 2025, overhauled several major tax provisions. Here are the five changes that will most directly affect your filing this year.
1. Bonus Depreciation Is Back at 100%
Under the original Tax Cuts and Jobs Act, bonus depreciation was phasing down: 80% for 2023, 60% for 2024, and 40% for 2025. The OBBBA restored it to 100% retroactive to January 20, 2025. If you purchased qualifying business assets during 2025, you can expense the full cost in year one. This applies to both new and used property, including machinery, equipment, vehicles (subject to luxury auto limits), and qualified improvement property.
2. Section 179 Expensing Increased
The Section 179 deduction limit jumped to $1,500,000 with a phase-out threshold beginning at $3,800,000 in total asset purchases. This gives small businesses significant room to write off equipment purchases without hitting the cap. If your total purchases are under the phase-out, you can combine Section 179 with bonus depreciation for maximum tax benefit.
3. R&D Expenses Are Deductible Again
Since 2022, businesses were required to amortize research and development costs over five years rather than deducting them immediately. The OBBBA reversed this. R&D expenses incurred in 2025 can be fully deducted on your current return. If you amortized R&D costs on your 2022 through 2024 returns, talk to your preparer about whether amended returns make sense.
4. No Federal Tax on Tips or Overtime
Employees who earned qualifying tip income or overtime compensation during 2025 can claim a new above-the-line deduction. This is limited to tax years 2025 through 2028. As an employer, make sure your W-2s properly categorize these amounts. Inaccurate reporting will prevent your employees from claiming the deduction and may trigger IRS questions.
5. Standard Mileage Rate Increased to 72.5 Cents
The business standard mileage rate for 2025 is 70 cents per mile, and for 2026 it rises to 72.5 cents. If you use the standard mileage method for vehicle deductions, make sure you are applying the correct rate for the tax year you are filing. Maintain a contemporaneous mileage log, as the IRS frequently disallows mileage deductions that lack documentation.
Take Action
These changes create real tax savings, but only if you file correctly. Gather your records, confirm your depreciation schedules, and work with a qualified preparer who understands the OBBBA provisions. The earlier you file, the sooner you benefit.