Empathizing with Business Owners
With each new federal legislation, the challenge lies in unraveling the extensive changes and understanding their impact on your business. The "One Big Beautiful Bill Act" compounds the reforms of the 2017 Tax Cuts and Jobs Act, ushering in substantial tax changes. This guide is meant to break down these changes into simple, actionable insights for businesses.
Bonus Depreciation Returns
One of the noteworthy updates is the return of bonus depreciation. Businesses can now permanently expense 100% of qualified capital assets acquired from January 20, 2025. This includes manufacturing buildings placed in service before 2031, offering substantial tax relief and encouraging capital investments.
R&D Expensing Reinstated
The Act brings back full deduction rights for domestic research costs, significantly benefiting innovation-driven businesses. It permits accelerated recovery of capitalized R&D between 2022 and 2024, though foreign R&D costs still require amortization, emphasizing a thrust on domestic research advances.
Qualified Business Income Deduction
Another key aspect is the permanence of the 20% QBI deduction, crucial for small businesses. Expanded phase-ins up to $75,000 for single filers and $150,000 for joint filers offer more scope for optimizing tax positions.
Charitable and Meal Deduction Adjustments
Changes also extend into charitable giving with a new 1% limit for corporations and a 0.5% AGI limit for individual deductions. Meal deductions for employer-provided on-site meals will see restrictions in 2026, exempting certain fishing businesses.
Insightful Shifts in Business Structures and Deductions
The Act raises the limit on taxable REIT subsidiary holdings from 20% to 25% starting in 2026, facilitating additional financial flexibility. It also enacts a tiered gain exclusion for Qualified Small Business Stock, increasing the per-issuer cap and asset threshold.
Proactive Planning for the Future
Despite the extensive changes brought by the One Big Beautiful Bill Act, strategic planning can cushion potential impacts. We encourage you to engage with financial professionals to review your current tax strategies, ensuring they are aligned with the new regulations and optimized for your advantage.
