The U.S. House of Representatives has passed President Donald Trump’s “One Big Beautiful Bill.” — a sweeping reconciliation package combining tax, spending, and policy provisions. Now the bill heads to the Senate for consideration. Senate discussions are expected to begin in June, with Republican leadership aiming for final passage by July 4. While changes are still possible, the bill’s progress underscores the potential for major tax policy shifts impacting both businesses and individual taxpayers.
Business Tax Provisions to Watch
These are the major proposals in the bill that could directly affect your business’s tax planning, capital investments, and operational strategy:
- Qualified Business Income (QBI) Deduction
- What’s proposed: Permanent extension of the QBI deduction.
- Change: Increases the deduction from 20% to 23%.
- Effective: 2026.
- Impact: More favorable deduction terms for pass-through entities like S corps, partnerships, and sole proprietorships.
- Research & Development Expenditures
- What’s proposed: Suspension of the requirement to capitalize and amortize domestic R&D expenses.
- Effective: 2025–2029.
- Impact: Businesses can again immediately expense R&D costs, which may incentivize more innovation spending.
- Bonus Depreciation
- What’s proposed: 100% expensing of qualified property through 2029.
- Added bonus: Elective 100% depreciation for certain “qualified production property.”
- Impact: Significant boost to capital-intensive businesses.
- Business Interest Deduction
- What’s proposed: Reverts to EBITDA-based interest deduction calculation for 2025–2029.
- Impact: Eases financing restrictions for highly leveraged businesses.
- Excess Business Losses (EBLs)
- What’s proposed: Makes the limitation permanent.
- Impact: Restricts ability to use large losses to offset other income. Careful planning will be needed to manage multiyear tax exposure.
- Pass-Through Entity Taxes (PTET)
- What’s proposed: More restrictive deduction rules but allows certain entity-level taxes to bypass the individual SALT cap.
- Impact: Encourages more states and entities to adopt PTET regimes, with careful attention needed to meet IRS criteria.
- Employee Retention Credit (ERC)
- What’s proposed: Retroactively terminates claims after Jan 31, 2024; increases penalties for misuse.
- Impact: Businesses with pending claims may be at risk; review eligibility and submission dates immediately.
Other Business and International Provisions
- Section 179 Expansion: Higher expensing caps for qualifying small business purchases.
- Third-Party Reporting Relief: Loosens reporting thresholds for platforms like PayPal and Venmo.
- Low-Income Housing Tax Credit: Extended and expanded.
- International Provisions (GILTI, FDII, BEAT): Freezes existing deductions and rates at current levels, avoiding the previously scheduled 2026 increases.
- Foreign Tax Retaliation: Allows targeted tax increases on foreign businesses from jurisdictions deemed to impose unfair taxes.
Inflation Reduction Act (IRA) Rollbacks
Businesses in energy, manufacturing, or clean tech sectors should take particular note:
- Clean Energy Credits Terminated: EV and energy-efficient home credits end after 2025.
- Credit Phaseouts Through 2031: Includes electricity production, nuclear power, and advanced manufacturing.
- Credit Transferability Ends: Businesses can no longer sell unused credits under many programs after 2027.
Individual and Estate Tax Provisions
These personal tax proposals are worth noting for owners, partners, and high-net-worth individuals:
- Tax Rates: Current brackets made permanent.
- Standard Deduction Boost: Temporarily increased by $1,000–$2,000 for 2025–2028.
- State and Local Tax Deduction (SALT) Cap: Raised to $30,000, with phaseouts at higher incomes.
- Child Tax Credit: Increased temporarily to $2,500, then reverts to permanent $2,000.
- No Tax on Tips & OT: Deduction allowed for qualified tips and overtime from 2025–2028.
- Enhanced Senior Deduction: Additional $4,000 for qualifying seniors through 2028.
- Estate/Gift Tax Exemption: Permanently raised to $15 million starting 2026, indexed to inflation.
Takeaways for Corporate Taxpayers
- Start modeling cash flow and tax liability now, especially if you rely heavily on depreciation, R&D, or business interest deductions.
- Review pass-through structures to understand PTET impacts and SALT cap workarounds.
- Plan for Expiring Provisions: Temporary tax breaks like bonus depreciation and R&D expensing require forward-looking tax strategies to manage future shifts in deductions.
- Watch for clean energy phaseouts if you rely on or invest in those credits.
PriceKubecka’s Here to Help
This legislation, if passed, will shape the business tax landscape for years to come. Our team is closely monitoring every update. If you’d like a customized impact analysis or have questions about how the proposed changes affect your business or estate plans, don’t hesitate to CONTACT US. Let’s make sure you’re ready — whatever form this bill finally takes.
Disclaimer: This article is for informational purposes only and should not be construed as legal or tax advice. Please consult with us individually for guidance tailored to your specific circumstances.