July 2025
Congress has advanced significant tax legislation under the One Big Beautiful Bill (OBBB), which has implications for businesses across various industries. The bill, passed by the House and currently under Senate consideration, includes a combination of growth incentives and targeted repeals. The Senate version of the text (link to text) provides the latest breakdown of the most impactful business tax provisions. Below is a summary of business changes, and in the coming weeks, we will detail the major credits and incentives changes.
- R&D Expensing Restored: The bill permanently restores immediate expensing for domestic research and development (R&D) expenses. Small businesses with gross receipts of $31 million or less can retroactively expense R&D costs incurred after December 31, 2021. For all other businesses, domestic R&D expenses incurred between December 31, 2021, and January 1, 2025, can be deducted over a one- or two-year period.
- Interest Deduction Cap Reinstated: The bill permanently reinstates the EBITDA-based limitation on business net interest deductions, reversing the shift to EBIT under prior law.
- Bonus Depreciation Made Permanent: Businesses can now permanently claim 100% bonus depreciation for short-lived capital investments, encouraging continued capital expenditures.
- Expensing for Structures: A temporary 100% expensing provision is introduced for qualifying structures. To qualify, construction must begin between January 19, 2025, and January 19, 2029, and the property must be placed in service before January 1, 2031.
- Section 199A Deduction Made Permanent: The popular 20% pass-through deduction is made permanent. The bill also increases the phase-in threshold by $50,000 for single filers and $100,000 for joint filers, and introduces a minimum deduction of $400 for taxpayers with at least $1,000 of qualified business income (QBI) who materially participate in the business.
- Charitable Deduction Floor for Corporations: A 1% floor is imposed on the deduction of charitable contributions made by corporations.
- Section 70308 – Enhanced Advanced Manufacturing Credit (48D): The Senate version of the bill increases the Section 48D advanced manufacturing investment credit to 35% for qualified property placed in service as part of an advanced manufacturing facility, such as those producing semiconductors or related equipment.
- Energy Credit Reforms: The bill eliminates the clean electricity production (45Y) and investment (48E) credits for projects placed in service after 2027, except for baseload power sources like nuclear, hydropower, geothermal, and battery storage. It also introduces foreign entity of concern (FEOC) restrictions and an excise tax for wind and solar projects that exceed FEOC content thresholds.
- Other Energy Changes:
– Repeals the clean hydrogen production credit (45V) and the energy-efficient commercial buildings deduction (179D) after one year.
– Extends the clean fuel production credit (45Z) through 2030 and expands eligibility.
– Adds FEOC restrictions to credits including 45U, 45Z, 45Q, and 45X, and modifies phaseouts and eligibility criteria. - Intangible Drilling Costs: These must now be included in the calculation of adjusted financial statement income, affecting book-tax conformity.
- Publicly Traded Partnerships: Income from hydrogen storage, carbon capture, advanced nuclear, hydropower, and geothermal energy is now included in qualifying income for certain publicly traded partnerships treated as C corporations.
Below is the table of sections of the OBBB and the ones highlighted that we will dig into over the next few weeks. Be on the lookout for these items:
CHAPTER 3 — ESTABLISHING CERTAINTY AND COMPETITIVENESS FOR AMERICAN JOB CREATORS
SUBCHAPTER A — PERMANENT U.S. BUSINESS TAX REFORM AND BOOSTING DOMESTIC INVESTMENT
Section | Title |
Sec. 70301 | Full expensing for certain business property. |
Sec. 70302 | Full expensing of domestic research and experimental expenditures. |
Sec. 70303 | Modification of limitation on business interest. |
Sec. 70304 | Extension and enhancement of paid family and medical leave credit. |
Sec. 70305 | Exceptions from limitations on deduction for business meals. |
Sec. 70306 | Increased dollar limitations for expensing of certain depreciable business assets. |
Sec. 70307 | Special depreciation allowance for qualified production property. |
Sec. 70308 | Enhancement of advanced manufacturing investment credit. |
Sec. 70309 | Spaceports are treated like airports under exempt facility bond rules. |
CHAPTER 5 — Ending Green New Deal Spending, Promoting America-First Energy, and Other Reforms
Subchapter A — Termination of Green New Deal Subsidies
Section | Title |
Sec. 70501 | Termination of previously-owned clean vehicle credit. |
Sec. 70502 | Termination of clean vehicle credit. |
Sec. 70503 | Termination of qualified commercial clean vehicles credit. |
Sec. 70504 | Termination of alternative fuel vehicle refueling property credit. |
Sec. 70505 | Termination of energy efficient home improvement credit. |
Sec. 70506 | Termination of residential clean energy credit. |
Sec. 70507 | Termination of energy efficient commercial buildings deduction. |
Sec. 70508 | Termination of new energy efficient home credit. |
Sec. 70509 | Termination of cost recovery for energy property and qualified clean energy facilities, property, and technology. |
Sec. 70510 | Modifications of zero-emission nuclear power production credit. |
Sec. 70511 | Termination of clean hydrogen production credit. |
Sec. 70512 | Termination and restrictions on clean electricity production credit. |
Sec. 70513 | Termination and restrictions on clean electricity investment credit. |
Sec. 70514 | Phase-out and restrictions on advanced manufacturing production credit. |
Sec. 70515 | Restriction on the extension of advanced energy project credit program. |
Subchapter B — Enhancement of America-First Energy Policy
Section | Title |
Sec. 70521 | Extension and modification of clean fuel production credit. |
Sec. 70522 | Restrictions on carbon oxide sequestration credit. |
Sec. 70523 | Intangible drilling and development costs taken into account for purposes of computing adjusted financial statement income. |
Sec. 70524 | Income from hydrogen storage, carbon capture, advanced nuclear, hydropower, and geothermal energy added to qualifying income of certain publicly traded partnerships. |
Sec. 70525 | Allow for payments to certain individuals who dye fuel. |
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