6 Key Small Business Impacts of the One Big Beautiful Bill
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill (OBBB). It is sweeping policy legislation that includes extending existing and creating new tax relief measures. Tax priorities in the Bill include limitations on individual and business deductions, changes to certain international tax provisions and the elimination of certain Inflation Reduction Act incentives. Let’s look at six of the key takeaways from the OBBB.
Permanent, 100% Bonus Depreciation
Qualified property placed in service after January 19, 2025 is eligible for a 100% bonus depreciation deduction on a permanent basis. Taxpayers also have the option to use a 40% depreciation deduction rather than 100% in 2025. The remaining 60% of the cost would be depreciated over the normal provisions.
New Qualified Production Property (QPP) Deduction
Qualified Production Property used in manufacturing and/or production activities receives 100% bonus depreciation. It applies to property in service before January 1, 2031, with construction beginning between January 19, 2025 and January 1, 2029. QPP is defined as the portion of any non-residential real property that is used by a taxpayer as an integral part of a qualified production activity. These activities must result in a substantial transformation of the property, and must be related to manufacturing, production or refining of tangible personal property. QPP does not include property used for offices, administrative services, lodging, parking, etc.
Immediate Deduction for Domestic Research & Expenditures (R&E)
Domestic research expenditures paid or accrued in 2024 or onward are immediately deductible. Under prior law such expenditures were required to be capitalized and amortized over five years. Foreign R&E costs continue to be capitalized and amortized over 15 years.
Business Interest Limitation Relief
Beginning in 2025, businesses can again calculate their adjusted taxable income based on taxable earnings before interest, taxes, depreciation and amortization (EBITDA). Beginning in 2022, adjusted taxable income was based on the more limiting taxable earnings before interest and taxes (EBIT) model. It was far more restrictive for many business taxpayers.
Permanent Qualified Business Income (QBI) Deduction
A 20% deduction for qualified business income has been made permanent. The phase out ranges have been expanded and thresholds have been indexed for inflation. A $400 minimum deduction was introduced for individuals who have aggregate QBI with respect to all active qualified trades or businesses.
Permanent Excess Business Loss Limitation
Deduction limits for excess business losses ($313,000 single; $626,000 joint in 2025) remain in place permanently, converting excess to net operating loss carry forward.
Many of the provisions in the One Big Beautiful Bill have varying effective and expiration dates. Some have been enacted on a permanent basis, others have not. With these myriad of revisions to business tax laws, let Caja Holdings help you understand and file your business taxes, so you can take advantage of all the new changes.