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The Encompassing and Majestic Legislation Labeled as the Big Beautiful Bill Act

Bill Signed on July 4, 2025, Permanently Extends 2017 Tax Cuts and Introduces Wide-Ranging Tax Changes for Businesses, Individuals, and Tax-Exempt Organizations, Involving Modifications to Deductions, Expensing Rules, and International Tax Provisions.

The One Big Beautiful Bill Act
The One Big Beautiful Bill Act

The Encompassing and Majestic Legislation Labeled as the Big Beautiful Bill Act

The **One Big Beautiful Bill Act (OBBB)**, signed into law on July 4, 2025, brings about a significant transformation to the U.S. tax code, introducing new provisions and extending several key TCJA (Tax Cuts and Jobs Act) incentives for businesses and individuals.

## Key Business Tax Changes

### Qualified Small Business Stock (QSBS)

The OBBB broadens the scope of QSBS provisions, although specifics such as changes to exclusion percentages or holding periods remain unclear. The expansion suggests increased incentives for investment in qualifying small businesses.

### Domestic Research and Experimental Expenditures

The OBBB does not explicitly address changes to domestic research and experimental (R&E) expenditures under Section 174, leaving the TCJA's requirement to capitalize and amortize R&E expenses over 5 years (15 years for foreign research) in place by default, unless repealed or amended by the OBBB.

### Eligible Property (Depreciation and Expensing)

The OBBB does not provide explicit details about changes to eligible property classification, bonus depreciation, or Section 179 expensing. However, given the act's broad impact and extension of many TCJA provisions, it is plausible that some depreciation and expensing rules could be extended, but specifics are not available.

### Business Interest Deductibility (Section 163(j))

The OBBB does not explicitly mention changes to Section 163(j) business interest expense limitations. This suggests that the current rules, generally limiting deductions to 30% of adjusted taxable income, remain in place.

### Qualified Business Income Deduction (Section 199A)

The OBBB does not specify changes to the Section 199A Qualified Business Income (QBI) deduction. The deduction, which allows certain pass-through businesses to deduct up to 20% of qualified income, appears to continue unchanged.

### Semiconductor Manufacturing Investment Tax Credit

The OBBB does not provide specific detail on semiconductor or “CHIPS Act” credits. The act does refer to energy tax credit provisions but does not directly address semiconductor manufacturing incentives.

### Qualified Production Property Expensing

The OBBB does not explicitly reference changes in qualified production property expensing. The summaries emphasize the act’s broad impact but do not spell out changes to specialized expensing provisions for specific industries.

## Broader Business Tax Context

| Provision | Change in OBBB (2025) | Details from Sources | |----------------------------------|----------------------------------------|-----------------------------------------| | QSBS | Expanded (details unclear) | “Expands provisions” from TCJA[1] | | Domestic R&E Expenditures | Not explicitly addressed | No mention in summaries[1][4] | | Eligible Property/Depreciation | Not explicitly addressed | No mention in summaries[1][4] | | Business Interest Deductibility | Not explicitly addressed | No mention in summaries[1][4] | | QBI Deduction (199A) | Not explicitly addressed | No mention in summaries[1][4] | | Semiconductor Investment Credit | Not explicitly addressed | No mention in summaries[1] | | Qualified Production Expensing | Not explicitly addressed | No mention in summaries[1][4] |

## Other Notable Business Tax Provisions

- **International Tax**: The OBBB makes significant changes to Foreign-Derived Intangible Income (FDII) rules, renaming the benefit to “Foreign-Derived Deduction Eligible Income,” lowering the tax rate to 14%, limiting expense apportionment, and repealing the qualified business asset investment (QBAI) concept, thereby increasing FDII benefits for U.S. exporters. - **Carried Interest**: The 3-year holding period for carried interest to receive capital gains treatment is retained. - **State and Local Tax (SALT) Deduction**: The SALT deduction cap for itemizers is increased to $40,000, phased down to $10,000 for those with AGI over $500,000; pass-through entity tax (PTET) workarounds remain available. - **Tax Credits**: Accelerated phase-outs, terminations of some credits, and new foreign-entity restrictions for energy-related tax credits are enacted.

## Summary

The **One Big Beautiful Bill Act** makes permanent many TCJA provisions and introduces new incentives, particularly for investment and international business, but does not detail explicit changes to several major business tax provisions (QSBS, R&E, eligible property, interest deductibility, QBI, semiconductor credits, or qualified production property expensing) in the available summaries from leading law firms. The act’s most clearly articulated business tax changes relate to international taxation (FDII) and energy tax credits, with broader “expansion” language suggesting possible extensions or enhancements of other TCJA business incentives. For precise guidance on these provisions, practitioners will need to review the full 870-page act or await detailed technical analyses from the IRS and tax commentators.

- The Act includes tax cuts of $4.5 trillion and spending cuts of $1.2 trillion, for a net cost of approximately $3.3 trillion over the 10-year budget window. - The Act relaxes the limitation on the deductibility of business interest by reverting to a 30% limit of EBITDA, effective for taxable years beginning after 2024. - Taxpayers who cannot itemize deductions will get a deduction of $1,000 ($2,000 for married taxpayers) effective for tax years beginning after Dec. 31, 2025. - The deduction for charitable contributions for itemizers is now limited to charitable contributions in excess of 0.5% of modified adjusted gross income. - The Act contains provisions that will affect nearly every sector of the economy and every type of taxpayer, including individuals, corporations, pass-through entities, and tax-exempt organizations. - Qualifying production activities include manufacturing, production or refining of tangible personal property and agricultural or chemical production. - The "One Big Beautiful Bill Act" was signed into law on July 4, 2025. - Qualified production property includes nonresidential real property used as an integral part of a qualified production activity, placed in service in the U.S., and the original use of which begins with the taxpayer. - The Act makes permanent many provisions of the 2017 Tax Cuts and Jobs Act. - The Act permanently reinstates elective expensing for qualifying domestic research and experimental expenditures. - The Act amends the formula for the per-issuer cap on the QSBS exclusion to $15 million. - The Act increases the gross asset value cap for Qualified Small Business Stock issuers from $50 million to $75 million. - The Act introduces several key changes aimed at refining existing frameworks and implementing new rules to better align with the global economic environment, effective for taxable years beginning after December 31, 2025. - The construction of qualified production property must begin after Jan. 1, 2025, and before Jan. 1, 2029, and the property must be placed in service after July 4, 2025, and before Jan. 1, 2031.

The One Big Beautiful Bill Act (OBBB) does not specify changes to the Qualified Production Property expensing, leaving the TCJA's provisions in place by default. However, given the act's broad impact and extension of many TCJA provisions, it is plausible that some changes to qualified production property expensing could be made in the future.

Finance professionals and businesses should keep an eye on upcoming technical analyses from the IRS and tax commentators for precise guidance on the OBBB's impact on qualified production property expensing and other business tax provisions.

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