Major Business Tax Changes in the One Big Beautiful Bill (OBBB)

Posted by Cheri Abels on Posted on in Newsletters | 3 Comments

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. 

IRS Circular 230 Required Notice‐‐IRS regulations require that we inform you that to the extent this communication contains any statement regarding federal taxes, that statement was not written or intended to be used, and it cannot be used, by any person (i) for the purpose of avoiding federal tax penalties that may be imposed on that person, or (ii) to promote, market or recommend to another party any transaction or matter addressed herein.