The One, Big, Beautiful Bill Act was signed into law on July 4, 2025, delivering the most significant tax legislation since the Tax Cuts and Jobs Act of 2017. The bill touches nearly every area of business taxation. Here are the five provisions that will have the biggest impact on your operations and planning.
1. Permanent 100% Bonus Depreciation
The TCJA’s bonus depreciation was phasing down to 40% for 2025 and would have disappeared entirely by 2027. The OBBBA restores the rate to 100% and makes it permanent. This means any qualifying business property you place in service can be fully expensed in year one, with no sunset. For capital-intensive businesses, this is transformational. It eliminates the timing pressure of the phasedown and allows long-term equipment planning without worrying about which year’s depreciation rate you will get.
2. R&D Immediate Expensing Restored
Since 2022, businesses were required to amortize research and development costs over five years instead of deducting them immediately. This was one of the most complained-about provisions in the tax code, particularly for technology and manufacturing companies. The OBBBA reverses the amortization requirement retroactively. R&D expenses are once again fully deductible in the year incurred. Businesses that amortized R&D costs on 2022 through 2024 returns should evaluate amended return opportunities.
3. QBI Deduction Made Permanent at 23%
The qualified business income deduction for pass-through entities was set to expire after 2025. The OBBBA makes it permanent and increases it to 23% of qualified business income. If you operate as an S-Corp, partnership, LLC, or sole proprietorship, this deduction is now a permanent feature of your tax planning rather than a temporary provision you had to plan around.
4. No Tax on Tips and Overtime (2025-2028)
New above-the-line deductions allow employees to deduct qualifying tip income and overtime compensation from their taxable income. This runs from 2025 through 2028. If you employ workers who earn tips or overtime, this provision effectively gives them a tax cut. It also means your payroll reporting must accurately categorize these amounts on W-2 forms.
5. SALT Deduction Cap Raised to $40,000
The state and local tax deduction cap, set at $10,000 since 2018, increases to $40,000 for taxpayers with AGI under $500,000. For business owners in high-tax states like California, New York, New Jersey, and Illinois, this is a meaningful reduction in federal tax liability. The cap was one of the most contentious provisions of the TCJA, and this increase addresses much of the pain it caused for middle-income business owners.
What to Do Now
Review your 2025 estimated tax payments in light of these changes. If your current estimates were based on the old depreciation phasedown or the $10,000 SALT cap, you may be overpaying. Consult your tax advisor about adjusting Q3 and Q4 estimates to reflect the new law. For R&D amortization, begin gathering documentation for potential amended returns. And update your payroll systems to properly report tips and overtime for W-2 purposes.