The One Big Beautiful Bill Act was signed into law on July 4, 2025. The legislation makes permanent many of the 2017 Tax Cuts and Jobs Act provisions that were otherwise set to expire at year’s end, while introducing new business and individual tax provisions.
The OBBBA combines sweeping tax cuts, spending changes, phased-out clean energy incentives, expanded estate exemptions, and tax provisions affecting pass-through entities and C corporations alike. While the Act delivers meaningful tax flexibility and liquidity opportunities for small and mid-size businesses, it also adds layers of complexity and the risk of future retrenchment.
“By aligning strategy with the new permanent provisions and proactively navigating the temporary ones, small businesses can harness the act’s benefits while guarding against potential negative results during and after the upcoming legislative cliffs,” said Rick Stiebritz, President and Managing Shareholder at Fischer Cunnane Certified Public Accountants & Consultants.
For small and mid-size businesses, several key provisions stand out, including:
Qualified Business Income Expense Provisions: The 20 percent deduction for qualified business income (QBI) — a major benefit for sole proprietors, partnerships, and S corporations — is now permanent, with a refined calculation and more generous phase-in rules, including inflation-adjusted minimums for higher-income taxpayers.
Section 179 Expense Limits: This expense limit has doubled, allowing immediate deductions on up to $2.5 million in qualifying asset purchases. Phaseouts now begin at $4 million and end at $6.5 million in a single tax year.
Bonus Depreciation: Now restored to 100 percent on a permanent basis, depreciation is allowed for the full cost of qualified tangible property, such as machinery, equipment, and software acquired after Jan.19, 2025, to be written off in the year of purchase.
R&D Expense: Businesses can now fully expense domestic research and development spending in the year incurred rather than capitalizing it over multiple years. In addition, eligible businesses may retroactively amend returns to reclaim unclaimed R&D deductions dating back to Jan. 1, 2022.
Qualified Small Business Stock (QSBS) Gains: Under former rules, gains on QSBS held for five-plus years were fully exempt. OBBBA offers a new tiered structure that provides a 50 percent exclusion after three years, 75 percent after four years, and 100 percent after five years. The gross asset threshold has risen from $50 million to $75 million, indexed to inflation, and the exclusion cap per issuer has increased to $15 million, also inflation-adjusted.
Interest Deductions: Businesses also benefit from more generous interest deductions under Section 163(j). Adjusted taxable income (ATI) for calculating interest limits once again excludes depreciation, depletion, and amortization, returning to pre-2022 rules and improving deductibility for capital-intensive companies. On the compliance side, reporting thresholds for third-party payment platforms like PayPal and Venmo have been raised, reducing paperwork for casual sellers and gig workers.
The real-world implications for small to mid-size businesses are significant. Immediate expensing through bonus depreciation and Section 179 boosts cash flow for equipment purchases, while full and retroactive R&D deductibility reduces taxable income and frees capital for innovation. Expanded QSBS provisions encourage earlier exits and increased investment in startups, while the permanent QBI deduction eliminates legislative uncertainty, aiding long-term planning.
However, some concerns remain. Higher national deficits could push interest rates upward, making borrowing more expensive and offsetting some of the benefits of the expanded deductions — particularly for businesses that rely heavily on financing. Additionally, not all changes are permanent. Several provisions, including deductions for tips and overtime pay, the raised SALT cap, and certain clean energy incentives, are set to expire between 2027 and 2029. Business owners should be careful not to overcommit based on temporary benefits.
“To prepare, companies should review capital investment plans and consider accelerating purchases in 2025-2026 to maximize current expensing benefits,” said Rob Feenan, Shareholder, Taxation, Fischer Cunnane. “It is also worth reviewing R&D practices to identify any prior years’ costs that may be claimed under the new retroactive rules.”
For those in qualifying C corporations, the expanded QSBS benefits present an opportunity to rethink exit strategies, stock issuance, and holding periods. Pass-through entities should monitor income thresholds closely to ensure continued eligibility for the QBI deduction, while firms with debt can take advantage of the revised interest deduction rules to improve profitability.
“Businesses would also be wise to forecast for the ‘sunset cliff,’ when certain provisions expire,” said Feenan. “Compensation structures, benefits, and tax strategies may need to be adjusted well before these rollbacks occur. Coordinating closely with tax advisors, legal counsel, and estate planning professionals will be essential, particularly given the higher estate exemptions and changes to charitable deduction rules.”
The Takeaway: Act early where timing matters, coordinate strategies across tax and legal functions, and forecast conservatively to ensure your business can weather both the opportunities and the uncertainties this landmark bill creates.
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Fischer Cunnane is a certified public accounting firm that provides a comprehensive range of accounting, auditing, tax, and consulting services to individuals and businesses throughout the Philadelphia region. With a long-standing reputation for excellence, Fischer Cunnane is dedicated to helping clients achieve their financial goals. Visit Fischer Cunnane or email [email protected].
