The Legislative Proposal Known as the One Magnificent Massive Act
The One Big Beautiful Bill Act, signed into law on July 4, 2025, brings about significant changes to various business-related tax provisions, including Qualified Small Business Stock (QSBS), expensing rules, interest deductibility, the qualified business income deduction, semiconductor credits, and production property expensing.
Qualified Small Business Stock (QSBS): The Act maintains the existing framework for QSBS, with no major modifications highlighted.
Full Expensing of Domestic Research and Experimental Expenditures (Section 174A): The Act permanently extends the 100% bonus depreciation for qualified property, which likely includes research and experimental expenditures. However, specific details on Section 174A were not found, indicating normal rules for immediate expensing may apply.
Full Expensing of Eligible Property (Section 168(k)): The Act permanently restores 100% bonus depreciation, initially enacted by the Tax Cuts and Jobs Act (TCJA), for qualified property acquired after January 20, 2025. This supersedes the scheduled phase-down.
Relaxed Limitation on Deductibility of Business Interest (Section 163(j)): The Act does not mention direct changes to Section 163(j), suggesting no key change or no explicit change was highlighted in the provided summaries.
Deduction for Qualified Business Income (Section 199A): The Act makes permanent the 20% qualified business income (QBI) deduction established under Section 199A and expands the phase-in range for deduction limits for specified service trades or businesses (SSTBs) and other entities. The threshold amounts for non-joint filers increase from $50,000 to $75,000, and for joint filers from $100,000 to $150,000. A minimum deduction of $400 (inflation adjusted) is also introduced for taxpayers with at least $1,000 of QBI from active trades or businesses.
Semiconductor Manufacturing Investment Tax Credit (Section 48D): The Act does not provide information on any amendment or new provision related to Section 48D or semiconductor manufacturing credits.
Immediate Expensing for Qualified Production Property (Section 168(n)): The Act introduces new 100% bonus depreciation for "qualified production property" with construction beginning after December 31, 2024, and placed in service before January 1, 2034. This property generally refers to nonresidential real property used in manufacturing, production, or refining tangible personal property.
In summary, the Act primarily makes permanent and expands bonus depreciation and the QBI deduction, introduces new bonus depreciation for production property, but detailed modifications for QSBS, Section 174A, Section 163(j), and Section 48D credit are not explicitly addressed in the available summaries. More detailed IRS guidance or legislative text would be necessary for complete specifics on all these provisions.
The Act also includes provisions that will affect nearly every sector of the economy and every type of taxpayer, with a net cost of approximately $3.3 trillion over the 10-year budget window, consisting of tax cuts of $4.5 trillion and spending cuts of $1.2 trillion. Other key changes include an increased state and local tax deduction for itemizers, adjustments to the QSBS issuer cap, and the availability of the pass-through entity tax workaround for the state and local tax deduction. The deduction for charitable contributions for corporations is also limited to amounts in excess of 1% of the corporation's modified taxable income. Qualifying production activities include manufacturing, production or refining of tangible personal property, and agricultural or chemical production.
Businesses will find permanent changes to the Qualified Business Income (QBI) deduction, as the Act makes it more expansive and raises the phase-in range for deduction limits. (business, QBI deduction)
The Act also introduces new full expensing for qualified production property, which is nonresidential real property used in manufacturing, production, or refining tangible personal property. (business, production property expensing)
