One Big Beautiful Bill (the Bill)

The House and Senate passed the reconciliation bill, “One, Big, Beautiful Bill” (“the Bill”), on July 3, 2025, which was signed by President Donald Trump on July 4, 2025. The Bill incorporates the tax cuts promised by U.S. President Donald Trump during his campaign. The tax bill permanently extended specific tax provisions initially introduced during President Trump’s 2017 tax reform (TCJA), which are scheduled to expire at the end of 2025. Additionally, the bill includes several new provisions proposed by the House Republicans.

The following are the key provisions applicable to businesses: Research & Experimental Expenditure Under the current law, taxpayers are required to capitalize research and experimental (R&E) expenditures and amortize them over 5 years for any R&E expense incurred in the U.S. and 15 years for any R&E expense incurred outside the U.S. as of December 31, 2021. This provision is governed by Section 174.

Under the new legislation, taxpayers will be able to immediately deduct domestic R&E expenditures paid or incurred after December 31, 2024. This provision will be created under section 174A. However, the capitalization and amortization rules for the foreign R&E are likely to stay the same.

Bonus Depreciation Under the current law, taxpayers are allowed to deduct the cost of certain qualified properties placed in service in the business based on bonus depreciation rules governed by section 168(k). As part of this tax reform, the percentage to depreciate the eligible property decreased by 20% after 2022 and completely phasing out in 2027 and thereafter the assets were to be depreciated over their useful life. Under the new legislation, taxpayers will be allowed to take 100% bonus depreciation on property acquired and placed in service as of January 1, 2025.

Section 179 allows certain business assets to be expensed immediately but the amount to deduct is limited. The maximum amount a taxpayer could deduct is $1.25M per year. However, this deduction amount may be subject to further limitation depending on the income threshold. The bill has increased the deduction limit to $2.5M for properties placed in service beginning 2025.

Interest Deductibility

Section 163(j) limits the deductibility of business interest expense during the tax year, while any amount disallowed as a deduction during the current year was to be carried forward to after the next taxable year.

Under the current law, the interest deductibility threshold was reduced from 50% to 30% of the adjusted taxable income and the adjusted taxable income was changed from EBITDA (earnings before interest, taxes, depreciation and amortization) approach to (EBIT) (earnings before interest and taxes) approach.

Under the new legislation, the adjusted taxable income was restored to EBITDA approach to determine the interest expense deductibility limitation for the tax years beginning after 2024.

Section 199A

Section 199A allows taxpayers (excluding corporations) to deduct 20% of qualified business income earned in a qualified trade or business, subject to certain limitations.

Under the TCJA, this deduction was scheduled to expire by the end of 2025 tax year.

Under the new legislation, the Section 199A pass-through deduction will be permanent. The legislation also now includes a minimum deduction of $400 for taxpayers that have at least $1,000 qualifying income. Form 1099 Reporting

Form 1099 is typically used to report non-employment income to the IRS. Businesses are generally required to issue Form 1099 to a taxpayer (excluding corporations) who have received at least $600 or more in non-employment income during the year.

Under the new legislation, the threshold for reporting payments on 1099 forms (specifically 1099-MISC and 1099-NEC) has increased to $2,000 commencing in 2026 (subject to inflation). Charitable Contributions Under current law, taxpayers are permitted to deduct charitable contributions up to 10% of taxable income. Under the new legislation, taxpayers can deduct charitable contributions to the extent it exceeds 1% of taxable income, beginning in 2026. Recommended Action Items for Taxpayers The provisions mentioned earlier have been approved by both the House and Senate on July 3, 2025; however, they have yet to be integrated into the tax code and regulations. Taxpayers should be mindful of these tax changes and are encouraged to assess their tax situations to determine any potential effects. It is advisable for businesses to consult tax professionals to navigate these updates effectively. Staying informed will help ensure compliance and optimize tax benefits in light of the new provisions.