What the “Big Beautiful Bill” Means for Your Business: Tax Law Updates for 2025 and Beyond

The recently signed One Big Beautiful Bill Act brings major changes to the tax landscape for businesses of all sizes, effective for the 2025 tax year and beyond. As CPAs at Moss & Yantis in Mt. Pleasant, SC, we want to break down these updates in clear terms so you can make informed decisions.

 

Key Business Tax Changes

1. Qualified Business Income (QBI) Deduction

• The Section 199A deduction for pass-through entities (sole proprietorships, partnerships, S corporations, LLCs) is now permanent and is increased:

  • For 2025: remains at 20%.

  • Starting 2026: rises to 23% of qualified business income, up from the prior 20%.

  • Phase-out thresholds have been raised (e.g., $75,000 for single filers and $150,000 for joint filers) and are indexed for inflation.

• A “safety-net” minimum deduction is introduced, offering more predictability for small business tax planning.

2. Expensing and Depreciation Enhancements

• 100% Bonus Depreciation: Businesses can immediately expense the full cost of qualifying equipment and certain property acquired after Jan. 19, 2025. This provision is now permanent.

• Section 179 Expensing: The deduction limit increases to $2.5 million (with a phase-out threshold at $4 million), applicable to assets placed in service after Dec. 31, 2024. Indexed to inflation going forward.

• These changes simplify expensing for equipment, machinery, vehicles, and certain software.

3. Research and Experimental (R&E) Costs

• Full Expensing of Domestic R&D: Immediate deduction of domestic R&D costs is allowed through 2029, retroactive for small businesses back to 2022. Remaining unamortized expenses from 2022–2024 can be deducted fully in 2025 or amortized over two years.

• Foreign R&D must still be amortized over 15 years.

4. Business Interest and Loss Limitations

• The interest deduction limit reverts to a more favorable EBITDA (rather than EBIT) calculation from 2025 through 2029, allowing more interest to be deducted.

• The limitation on excess business losses remains permanent. Disallowed losses convert to net operating losses (NOLs).

5. Corporate and International Tax Provisions

• Updates to the U.S. international tax framework include new names for certain regimes:

  • GILTI (Global Intangible Low-Taxed Income) becomes Net CFC Tested Income (NCTI).

  • FDII (Foreign-Derived Intangible Income) becomes Foreign-Derived Deduction Eligible Income (FDDEI).

  • Tangible asset exclusions are removed; other technical revisions apply to international operations.

6. Other Business Incentives and Changes

• QSBS Exclusion Enhanced: The gain exclusion limit for Qualified Small Business Stock (QSBS) increases from $10 million to $15 million (or 10× basis) and is tiered depending on holding period (50%/3 years, 75%/4 years, 100%/5+ years). The asset threshold for “small business” rises from $50 million to $75 million.

• Clean Energy Credits Phased Out: Many tax breaks for solar, wind, energy-efficient improvements, and clean vehicles are being phased out or eliminated.

• Paid Family and Medical Leave: Employer tax credits for paid leave become permanent, enhancing support for workforce benefits.

• Employer-Provided Child Care Credit: This credit sees a significant increase, providing further incentive to support employees’ families.

• Opportunity Zones: Expanded program eligibility and new reporting requirements open up additional investment opportunities for eligible businesses.

• Sports Franchise Rule: For businesses acquiring professional sports teams, only 50% of intangible assets (goodwill, etc.) may now be amortized over 15 years.

7. Important Effective Dates

What Should Your Business Do Now?

• Review fixed asset plans to take advantage of expanded expensing.

• Evaluate R&D activities—immediate expensing may substantially lower taxable income.

• Check business structure—pass-throughs will benefit from the increased QBI deduction and higher limits.

• Analyze international operations—new tax rules warrant professional review.

• Monitor expiring credits—especially for “green” projects and investments.

• Consult your CPA for customized planning strategies in response to these significant changes.

Moss & Yantis CPAs are here to help you interpret these updates and optimize your business tax position. Contact us for a detailed analysis tailored to your company’s needs.

 

All information provided is based on official legislative summaries and professional resources as of July 23, 2025. For complex or unique situations, please schedule a personalized consultation for guidance specific to your business.