Business Tax Provisions of the One Big Beautiful Bill Act
March 09, 2026
by Edward K. Zollars, CPA
The enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, marked a shift in federal tax policy for business tax provisions, effectively moving the needle from the temporary "sunset" era of the 2017 Tax Cuts and Jobs Act toward a framework of permanence and domestic industrial incentive.
For tax practitioners, the OBBBA introduces an intersection of restored immediate expensing for domestic research costs, enhanced capital investment thresholds, and novel reporting requirements for employee overtime and tips. As the Treasury continues to issue critical transitional guidance — including key notices regarding bonus depreciation and R&D "true-up" procedures — CPAs must quickly pivot their planning strategies to maximize client benefits under these new rules.
The following table provides a concise summary of the key business tax provisions within the Act, highlighting essential IRC sections, updated dollar limits, and the most recent IRS administrative guidance issued by the date this article was written to assist in your compliance and advisory efforts. Additional guidance on these provisions is expected to be released throughout 2026.
| Bill Section & Name | IRC Section Impacted | Provision Details & IRS Guidance | Effective Date |
| Sec. 11011: Permanent Bonus Depreciation | IRC § 168(k) | Makes 100% bonus depreciation permanent. IRS Guidance: Notice 2026-11 confirms continuity with existing TCJA regulations (Reg. §1.168(k)-2) and clarifies acquisition dates for property purchased near the Jan 19 enactment window. | Generally applies to qualified property acquired after January 19, 2025 (and placed in service thereafter), subject to the statutory placed-in-service rules and transitional acquisition guidance (Notice 2026-11). |
| Sec. 11012: Enhanced Section 179 Expensing | IRC § 179 | Increases max deduction to $2,500,000 and phase-out to $4,000,000. IRS Guidance: Rev. Proc. 2025-32 provides the official inflation-adjusted items for the 2026 tax year. | Property placed in service after December 31, 2024. |
| Sec. 11021: Domestic R&E Expensing | New IRC § 174A | Restores immediate expensing for domestic R&E. IRS Guidance: Rev. Proc. 2025-28 details procedures for the automatic change in accounting method and “true-up” adjustments for 2022–2024 capitalized costs. | Tax years beginning after December 31, 2024 (Retroactive option for small businesses as well as optional write off of unamortized balance of domestic R&E over either one or two years). |
| Sec. 11022: Qualified Production Property (QPP) | IRC § 168(n) | New 100% deduction for tangible production structures. IRS guidance is anticipated (draft forms have referenced future guidance in a Notice), but no numbered Notice has been issued as of January 16, 2026. | Construction starting after January 19, 2025 and before January 1, 2029; placed in service before 2031. |
| Sec. 11031: Business Interest Limitation Relief | IRC § 163(j) | Reverts ATI calculation to EBITDA (adding back depreciation/amortization). For tax years beginning after 12/31/2025 163(j) applied before most capitalization rules; capitalized interest generally remains subject (except §§263(g), 263A(f)) and foreign inclusion items excluded from ATI. | Tax years beginning after December 31, 2024. |
| Sec. 11041: Permanent QBI Deduction | IRC § 199A | Makes the 20% deduction permanent and expands phase-in windows. | Tax years beginning after December 31, 2025. |
| Sec. 11051: Excess Business Loss Limitation | IRC § 461(l) | Makes the loss limitation permanent. IRS Guidance: Instructions for 2025 Form 461 set the threshold at $313,000 (Single) / $626,000 (Joint). | Tax years beginning after December 31, 2025. |
| Sec. 11062: QSBS Holding Period & Limits | IRC § 1202 | Tiered exclusion (50% at 3 yrs, 75% at 4 yrs, 100% at 5 yrs). The maximum gain exclusion will be increased to $15 million and the maximum total asset at issuance will rise to $75 million (both will be adjusted for inflation in the future). | Revised rules applies only to stock issued after July 4, 2025. Prior law rules apply to stock issued on or before that date. |
| Sec. 70201: No Tax on Tips (Payroll/Employer Impact) | New IRC § 224 | Allows individuals to deduct up to $25,000 of "qualified tips" from income and requires employer reporting on W2s. Married couples must file a joint return to claim this deduction. IRS Guidance: Notice 2025-69 defines “qualified tips” (must be voluntary and cash/digital) and Notice 2025-62 provides penalty relief for employers who fail to separately report these items on 2025 W-2s; IR-2025-114 details how employers should report this on W-2s for 2026. | Tax years 2025 through 2028. |
| Sec. 70202: No Tax on Overtime (Employer Impact) | New IRC § 225 | Allows overtime deduction up to $12,500 ($25,000 MFJ), subject to MAGI phaseout. Taxpayers cannot file MFS and claim this deduction. Requires employer reporting on W-2s. IRS Guidance: Notice 2025-62 provides a 2025 "grace period" for reporting; IR-2025-114 details how employers should report this on W-2s for 2026. | Tax years 2025 through 2028. |
| Sec. 70511: Advanced Manufacturing Credit | IRC § 48D | Increases credit to 35% for semiconductors. | Property placed in service after December 31, 2025. |
Key Dollar Limits and Phase-outs
- Section 179: Deduction phases out dollar-for-dollar starting at $4,000,000 in total
equipment purchases (Rev. Proc. 2025-32). - Section 1202 (QSBS): The increased $15 million cap and $75 million asset test apply to stock issued after July 4, 2025.
- R&D Retroactivity: Small businesses (Avg. receipts <$31M) must make the retroactive election and file the amended return by the earlier of July 6, 2026 or the last day to file a claim for refund for the tax year in question (Rev. Proc. 2025-28).
- Tips Reporting: For 2025, the IRS will not penalize employers for failing to provide the Treasury Tipped Occupation Codes nor tip information related to the tip deduction not previously required to be reported on Form W-2. (Notice 2025-62) Draft Forms W-2 for 2026 do provide for the reporting of this information on those returns.
- Overtime Reporting: For 2025, the IRS will not penalize employers for missing overtime data on W-2s, but encourages "good faith efforts" using separate statements (Notice 2025-62). Draft Forms W-2 for 2026 do provide for the reporting of this information on those returns.