What the Big Beautiful Bill Means for Your Business: Key Tax Changes You Should Know
The latest legislation, often called the “Big Beautiful Bill,” brings some major updates to the way businesses handle income, deductions, and depreciation. If you’re running a business, staying on top of these changes can help you plan better and save money this year and beyond. Let’s walk through what’s new and what it means for you.
Expensing, Depreciation & Amortization — What’s Changed?
Section 179 Expensing Gets a Boost
Good news! The limit for Section 179 expensing has gone up to $2.5 million, with the investment cap rising to $4 million starting after 2024. And it’s not just a one-time thing—these amounts will be adjusted for inflation after 2025, making it easier to write off bigger purchases (IRC Sec. 179).
What About Energy-Efficient Buildings?
The energy-efficient commercial building deduction will end for projects starting after June 30, 2026. So, if you’re thinking about investing in green buildings, plan accordingly (IRC Sec. 179D).
Bonus Depreciation Is 100% Now
Starting with assets bought after January 19, 2025, you can now deduct 100% of the cost through bonus depreciation. This applies to property and even certain plants that are grafted or planted after that date, helping you recover costs faster (IRC Sec. 168 and IRC Sec. 460).
Production Property Gets a Makeover
Bonus depreciation at 100% is also available for certain manufacturing or agricultural facilities built from January 19, 2025, through early 2029—if they’re used in the United States and placed in service by 2031.
Solar & Wind Energy Property
The previously used five-year recovery period for solar and wind energy projects is now eliminated for projects starting after December 31, 2024. That means faster deductions for renewable energy investments.
R&D Expenses—Faster Deductions
Starting in 2025, your domestic research and experimental costs can be deducted immediately, rather than spreading them out over several years. Foreign research costs still need to be capitalized and amortized.
What’s New in Trade & Business Expenses?
Qualified Business Income Deduction—Now Permanent!
Good news for pass-through business owners: the Qualified Business Income (QBI) deduction is now permanent. There are some tweaks to the phase-in limits, and inflation adjustments will come after 2025 (IRC Sec. 199A).
Interest Deduction Limits Get Tougher
After 2024, the calculation for your business interest deduction will focus on EBITDA (earnings before interest, taxes, depreciation, and amortization), making the rules more predictable. Plus, some foreign income exclusions are also in play (IRC Sec. 163).
Caps on Executive Compensation Deductions
A new rule starting after 2025 will affect corporations with controlled groups by applying a more streamlined way to limit deductible executive pay—specifically around the $1 million cap.
Other Important Business Changes
Charitable Giving by Corporations
For charitable contributions made after 2025, corporations can only deduct amounts that are more than 1% of their taxable income, up to 10%. Excess contributions can be carried over for five years.
Meals
Starting in 2026, the deduction for employer-provided meals that are typically tax-free will face some restrictions unless you’re providing meals on shipping or oil rigs (IRC Sec. 274).
Partnership & Industry-Specific Rules
Certain partnership payment rules will now happen automatically, and income from energy, transportation, and new tech sectors like hydrogen and geothermal energy now count as qualifying income for partnerships.
Construction & Contracting Simplified
Long-term residential construction contracts won’t be required to use the percentage of completion method anymore, which simplifies accounting and tax planning for builders (IRC Sec. 56 and IRC Sec. 460).
Final Thoughts
These changes are significant, but they also open up new opportunities for smart planning. Staying informed and working with your CPA can help you make the most of these updates and optimize your business’s tax strategy.
Contact Matthew Tomko at mtomko@tomkocpa.com to learn more or connect with us at the link below.
Don’t miss out on potential savings.
Reach out now to discuss how these changes affect your business.
Disclaimer: This blog is for informational purposes only and not intended to be taken as professional advice. Always consult a qualified professional for specific guidance. While we aim to keep information accurate and current with tax regulations, be sure to review guidelines annually for updates as they frequently change.