The One Big Beautiful Bill Act (OBBA) was signed into law on July 4^th, 2025, creating a number of opportunities and complexities for business owners to navigate. As we meet with our business owner clients to chart the best path forward considering this new bill, we’ve identified a few key themes, namely – bonus depreciation enhancements, qualified business income being made permanent, and increases to the research and development deduction.

Bonus Depreciation Enhancements

Bonus depreciation allows businesses to deduct 100% of the cost of certain tangible property in the year it is placed into service. Previously, this deduction was limited to 40% and was scheduled to decrease over time, but this enhancement provides an incentive to businesses to accelerate capital expenditures.

The new law also creates an opportunity to take 100% bonus depreciation on certain non-residential real property used in qualified production activity, such as manufacturing. This new type of property, called Qualified Production Property (QPP), would qualify for bonus depreciation if built between January 19, 2025 and January 1, 2029.

These new opportunities can provide some major tax savings for businesses in 2025 and beyond.

Qualified Business Income (QBI) Made Permanent

The QBI deduction is now permanent. This provision allows certain business owners to deduct 20% of business income from their personal return. The extension of the QBI deduction presents a great opportunity for owners of passthrough entities, such as partnerships and S Corporations, and will provide more certainty for tax planning in future years.

Research & Development Deduction Increases

The OBBBA allows for full expensing of domestic research and development costs in the current tax year, while still allowing for businesses to elect to capitalize the expenses over five years. This option will grant businesses more control over their cash decisions. A portion of the expensing option can be applied to prior years back to 2022 in a limited capacity but would require amending those years’ tax returns.

The OBBBA is a major tax bill that affects the tax planning strategies of business owners in particular. Familiarizing yourself with the changes and how they can benefit you can grant your business additional flexibility. However, with the enhanced tax opportunities, there is an additional layer of complexity to coordinate, especially when combined with the many changes to the individual tax laws. We encourage you to connect with your Wealth Advisor or CPA to project what these changes could mean for your business and your personal tax situation.

This article is for informational purposes only and is not intended as a substitute for personalized legal, tax, or investment advice. The information provided should be considered general in nature. It does not consider the specific financial situation, objectives, or needs of any individual or business. Bartlett & Co Wealth Management, LLC is an RIA registered with the Securities Exchange Commission. Registration alone does not indicate skill or expertise.