The One Big Beautiful Bill Act brings sweeping tax updates, offering big opportunities for both businesses and high-net-worth individuals:
The One Big Beautiful Bill Act (OBBBA) has dominated the news — viewed by some with skepticism and by others as common sense. Love it or hate it, this sweeping tax-and-spending law was passed by the 119th Congress and signed by President Donald Trump on July 4, 2025. At its core, the law is here to stay and blends tax reforms, entitlement changes and major spending initiatives that could affect nearly every sector and household in the U.S.
From the permanent extension of the popular Tax Cuts and Jobs Act (TCJA) provisions, such as the 20% Qualified Business Income (QBI) deduction and lower tax brackets, to the return of 100% bonus depreciation and expanded Section 179 expensing, the OBBBA is the driving force behind 2025 and 2026 tax issues.
In this guide, we’ll decode how OBBBA’s tax provisions are reshaping the tax landscape for both businesses and high-net-worth individuals (HNWIs), illustrate them real-world examples and highlight key steps to stay ahead of the changes.
The OBBBA is Congress’s most significant tax reform since the 2017 Tax Cuts and Jobs Act (TCJA). While the TCJA dramatically reshaped U.S. taxation — cutting corporate rates, creating the Qualified Business Income (QBI) deduction and introducing immediate expensing through bonus depreciation — many of its most business- and investor-friendly provisions were temporary. These provisions were set to expire after 2025.
CFOs and investors knew that by the end of 2025, core provisions — like the 20% QBI deduction and lower tax brackets — could vanish. As a result, business leaders delayed capital expenditures, uncertain whether bonus depreciation would continue. Family offices held back on intergenerational wealth transfers, wary that expanded estate exemptions would shrink.
With the passage of OBBBA, some of the most popular TCJA provisions were made permanent, raising certain thresholds to reduce compliance burdens, enhancing wealth transfer planning opportunities and modernizing international tax rules to reflect today’s global landscape. The shift from temporary to permanent rules makes 2026 a defining year for both corporate tax and personal tax planning — potentially shaping key tax and investment moves as early as 2025.
OBBBA also introduces several major tax changes designed to reshape how you plan, invest and manage cash flow. From permanent 100% bonus depreciation to new elections for qualified property, these provisions create both opportunities and strategic considerations that CFOs, tax leaders and business owners should evaluate now.
OBBBA’s depreciation rules are designed to give your business a lasting advantage. These provisions make it easier to plan, invest and get the most out of your tax benefits.
Under the 2017 TCJA, bonus depreciation was scheduled to phase down beginning in 2023 and fully expire after 2026. OBBBA permanently reversed this phase-out, meaning that you can continue to claim 100% bonus depreciation for assets placed in service after January 19, 2025. For qualified property placed in service between January 1, 2025, and January 19, 2025, the bonus percentage is 40%.
Good news: You can now fully expense the cost of most qualifying property — like equipment, machinery, software and certain infrastructure — in the year it’s placed in service.
Eliminating the TCJA phase-out schedule improves liquidity at the time of purchase and encourages faster reinvestment.
A pre-IPO software firm accelerates its capital investments in servers and networking infrastructure, capturing millions in deductions in a single year. The freed-up cash allows the company to delay an entity restructuring that would have otherwise limited how it could structure its business before going public.
The OBBBA introduces a new special depreciation allowance under IRC Section 168(n) for qualified production property. Here’s what you need to know:
OBBBA also introduced a separate option for qualified interior improvements (QIP) to non-residential buildings (renovations, remodels and fit outs). Instead of taking the full 100% write-off, you can elect a partial deduction of 40% (or 60% for certain property with longer production periods or certain aircraft) in the first tax year, with the remaining basis depreciated over the standard recovery period (typically 15 years). This option is especially useful if your business has low taxable income in the current tax year and you want to spread deductions into future tax years.
Section 179 has traditionally allowed small and mid-sized businesses to deduct the cost of equipment and certain improvements upfront rather than spreading the expense over many years. OBBBA permanently expands Section 179, raising deduction limits and broadening the types of property that qualify. This expansion:
In early 2025, a hotel chain spent $3 million on property upgrades. Thanks to expanded Section 179 limits, the hotel can deduct most of those costs immediately, lowering taxable income and freeing up cash for other projects ahead of peak season.
The 2017 TCJA included a major change to how you deduct R&E costs (also known as R&D, but we’ll use R&E in this guide as it relates to tax provisions). However, the rule didn’t take effect until 2022. Until that point, you could immediately deduct 100% of your R&E expenses in the year you incurred them.
But beginning with tax year 2022, you were required to capitalize and amortize those costs — over five years for domestic research and 15 years for foreign research. This shift created a heavy cash flow burden for innovation-driven businesses.
OBBBA relieves the capitalization pressure by restoring immediate expensing of domestic R&E for U.S. companies in technology, life sciences, manufacturing and other innovation-driven sectors — allowing them to reinvest more capital into research and product development.
Key provisions include:
With the return to 100% and immediate R&E expensing, you have new requirements for the 2025 tax year regarding IRS Form 6765. The new rules require more granular tracking of your research activities and expenses. You must now:
A biotech company investing $20 million in U.S. clinical trials in 2025 can now deduct the full amount immediately, lowering taxable income and freeing up millions to fund the next development phase.
OBBBA includes retroactive relief for small businesses (average gross receipts of less than $31 million) Prior-year returns (2022‒2024) can be amended to fully deduct domestic R&E costs that were previously amortized. To claim this benefit, however, you must make a Section 280C election. This election preserves the deduction but permanently reduces the R&E credit by roughly 21%, which is a new trade-off compared to prior rules, where you could claim both the full deduction and full credit without adjustment.
Should you deduct R&E costs right away? It depends on cash flow and credit usage. Companies needing near-term tax relief may find the immediate deduction valuable, while those with significant R&E credits might prefer to preserve the full credit instead.
Here’s a win for small businesses: OBBBA locks in the 20% QBI deduction for S corps, partnerships, LLCs, sole proprietorships and certain trusts with partnership or S corp income (subject to wage and income thresholds). This lowers the effective tax rate (ETR) for owners, allowing for more cash to reinvest in your business.
A family-owned manufacturing company structured as an S corp generates $1.5 million in qualified business income. With the 20% deduction, the owners can exclude $300,000 from taxable income each tax year. That translates to more than $60,000 in annual federal tax savings (assuming a 21% rate). That’s cash they can reinvest in new equipment, hire additional employees or expand into new markets. Over a decade, this permanent deduction could free up more than $600,000 for reinvestment.
OBBBA increases the SALT deduction cap from $10,000 to $40,000 for joint filers beginning in 2025, with gradual increases through 2029 before reverting back to $10,000 in 2030. For many high-income taxpayers, however, the benefit will be limited by phase-out rules, meaning the higher cap offers only modest relief.
The rule regarding excess business losses for noncorporate taxpayers — those exceeding the annual threshold — has also been made permanent, ensuring they are no longer suspended indefinitely. Instead, they are treated as Net Operating Losses (NOLs) and carried forward to offset future taxable income. This shift gives business owners and investors more flexibility. Rather than losing the upfront deduction, you can convert those losses into a long-term asset to reduce future tax liability.
A private equity portfolio company structured as a limited liability company (LLC) reports an $8 million loss in 2025, but its owners can only deduct $500,000 immediately due to the annual cap. Under OBBBA, the remaining $7.5 million carries forward as an NOL, available to offset income in future profitable tax years — helping smooth cash flow and lower long-term taxes.
Equally important is what OBBBA did not change: the pass-through entity tax (PTET) election. This provision allows partnerships and S corps to pay state taxes at the entity level — where they remain fully deductible at the federal level — and then pass the benefit back to owners. For private equity funds and high-income business owners, the PTET election continues to provide the most powerful workaround to the SALT cap, ensuring that state taxes paid at the entity level can still generate full federal deductions.
Opportunity Zones (OZ) were created in 2017 (under TCJA) to drive long-term investment in underserved communities. To date, more than 8,700 economically distressed census tracts across the U.S. have received the designation, representing areas where roughly 11% of the U.S. population resides.
The OZ 1.0 program — its first iteration — allowed investors to direct capital into qualified opportunity funds (QOFs) through December 31, 2026, with all OZ designations set to expire at the end of 2028. Now, OBBBA extends and makes the program permanent, with a handful of updates:
OZs continue to offer significant advantages for real estate developers, private equity funds and high-net-worth investors by aligning tax deferral with community revitalization.
A private equity fund that reinvests $20 million in deferred gains into a mixed-use redevelopment within an OZ-designated urban corridor can defer taxable gains while driving measurable social and economic impact.
Investors should be cautious with OZ investments made before January 1, 2027, as they offer only a one-year deferral, no basis step-up, and you may struggle to meet OZ requirements before the December 31, 2028, OZ 1.0 expiration.
Besides depreciation, OBBBA includes changes to how international tax are handled and introduces tax-advantaged investment accounts for children. See how these changes affect your business below.
The OBBBA introduces multiple adjustments to international tax provisions, many of which were established under the TCJA. These changes impact U.S. businesses operating globally and require careful consideration. Here’s a breakdown of the key updates.
Renamed to foreign-derived deduction eligible income (FFDEI) and has favorable and unfavorable implications for taxpayers.
Renamed to net CFC tested income (NCTI), this provision has a “mixed bag” of impacts:
The BEAT rate increases slightly, from 10% to 10.5%, and this is expected to have a minimal impact on most taxpayers.
The new rules introduce a mix of positive and negative changes but also deliver much-needed predictability through permanent provisions and enhanced incentives for domestic production and exports. While many taxpayers are likely to experience a net benefit, the ultimate impact will depend on several key factors, including:
These changes are complex and interconnected, meaning that improvements in one area can affect liabilities in another. With careful planning and the support of an international tax advisor, you can navigate these adjustments effectively, minimize tax liabilities and take advantage of new opportunities.
If you operate a C corporation, S corporation, partnership, and as a sole proprietor, you may now establish employer contribution programs for your employees’ children’s Trump Accounts.
These contributions offer your employees a tax-free benefit, and employers can generally deduct the contribution when it’s offered through a compliant plan.
Here’s what you need to know about making this an employee benefit.
Understanding the mechanics of OBBBA is only the first step. Equally important is recognizing how the law plays out across different industries. Below, we outline the opportunities and risks we’ve identified in technology, manufacturing and distribution, private equity and the nonprofit sector.
The technology sector stands to gain significantly from OBBBA’s tax provisions, which are designed to fuel innovation, streamline operations and support growth.
OpportunitiesThe manufacturing and distribution (M&D) sector can capitalize on several tax provisions under the OBBBA, which are designed to encourage domestic investment and enhance financial flexibility. However, you must also navigate potential risks, particularly in the international tax realm.
OpportunitiesThe private equity sector stands to benefit from key tax changes that enhance investor returns and provide greater flexibility in managing losses but look out for heightened challenges in international tax compliance.
OpportunitiesNonprofits now have new incentives to encourage charitable giving and clearer rules for executive compensation, alongside increased tax burdens on endowments and potential shifts in donor behavior under the OBBBA.
Opportunities
Just as businesses face a shifting tax landscape under OBBBA, HNWIs must also adapt. The law preserves lower individual rates and higher standard deductions, but it also cements limits on losses, deductions and mortgage interest. If you have multiple income streams, investment portfolios or closely held businesses, the permanence of these rules provides greater certainty — while introducing new constraints that require careful planning.
OBBBA makes several provisions from the 2017 TCJA permanent, ensuring continued lower tax rates and higher standard deductions, but also maintaining limits that directly affect your HNWI planning strategies.
What changedPermanent extensions. Several key provisions from the 2017 TCJA, originally set to expire in 2026, are now permanent under OBBBA. This locks in lower rates and deductions for individuals.
What stays the sameA married, high-net-worth individual with multiple businesses generates large first-year losses. Under OBBBA, only $626,000 can be deducted immediately. The remaining losses must be carried forward as NOLs to offset taxable income in future years.
Beginning January 1, 2026, OBBBA permanently increases the federal estate and gift tax exemption to $15 million per person (or $30 million for married couples), adjusted annually for inflation.
For families below these thresholds, planning is simpler since more wealth can transfer without triggering federal estate or gift tax. At the same time, portability elections take on added importance, as they allow couples to fully use both exemptions but require proactive filing.
For high- and ultra-high-net-worth families, proactive planning remains critical, as exemption levels could always change again with future legislation.
Trump Accounts offer a new savings vehicle for children under age 18. These accounts allow parents, grandparents and other authorized individuals to contribute up to $5,000 per year per child, regardless of the child’s earned income — a key difference from traditional IRAs.
These tax-advantaged accounts for children under 18 don’t have income limits, so any parent, grandparent or authorized individual can contribute to the tax-deferred accounts and follow gift tax treatments. Here’s what you need to know.
Planning Considerations
Under OBBBA, the income tax brackets for trusts and estates are now permanent:
Because trusts reach the top 37% rate at just $15,650 — compared to more than $600,000 for individuals — even modest amounts of retained income can face the highest tax rate. Trustees must weigh whether to retain income inside the trust, where it may be taxed at 37% or distribute it to beneficiaries who may be in lower brackets.
OBBBA also makes the 20% QBI deduction permanent for trusts and estates. As mentioned earlier, this applies to income from partnerships, S corps and sole proprietorships, lowering taxable income and supporting long-term compounding inside the trust.
A family trust earning $500,000 through an S corp interest, for instance, could claim the 20% QBI deduction on qualifying income — reducing taxable income by $100,000 and allowing more wealth to remain invested for future generations.
Beginning in 2025, OBBBA temporarily raises the cap on SALT deductions from $10,000 to $40,000 for joint filers, with the cap indexed (adjusted for inflation) upward by 1% annually through 2029. In 2030, the cap reverts back to $10,000. However, the benefit phases out entirely for households with incomes above $500,000 (joint) or $250,000 (single).
For most high-net-worth taxpayers, the expanded SALT cap offers little relief since incomes typically exceed the phase-out thresholds and the deduction effectively remains capped at $10,000. This limitation shifts attention to alternative planning strategies that can bypass the SALT cap altogether. One of the most effective is the PTET election.
PTET elections — available to LLCs, partnerships and S corps — allow state income taxes to be deducted at the entity level, preserving full federal deductibility. Because many HNWIs already hold businesses, real estate or investment vehicles in these structures, PTET elections can be especially powerful in high-tax states like New York, California and New Jersey.
Some trusts may also take SALT deductions separately, though the value is often constrained by phase-out rules unless carefully structured. In practice, a PTE election is usually the most reliable method for high-net-worth individuals to preserve federal deductions for state and local taxes — particularly when incomes exceed the phase-out thresholds.
New York–based high-net-worth individual who pays $1 million in state income taxes:
It’s important to note that you should not rely on the expanded SALT cap for meaningful tax savings, since most will exceed the income phase-outs. Instead, evaluate PTE elections at the partnership or S corp-level and, in some cases, consider selective use of trusts to preserve deductibility. Proactive entity structuring is essential to capture these benefits, particularly in high-tax states.
OBBBA expands access to QSBS, making it a more powerful tool for high-net-worth investors seeking tax-efficient exposure to growth companies.
For wealthy investors with significant capital gains, opportunity zones remain a key tax benefit. OBBBA makes OZs a permanent part of the tax code, with zone designations refreshed every 10 calendar years to target evolving areas of need. OZ 2.0 delivers long-term certainty, with rural designations creating outsized opportunities for those pursuing enhanced tax benefits and portfolio diversification.
You sell stock in 2025 with a $5 million capital gain. By reinvesting into an OZ QOF, the $5 million gain is deferred. After 10 tax years, if the QOF doubles to $10 million, the additional $5 million in appreciation is entirely tax-free — delivering a powerful combination of deferral and permanent exclusion.
Whether you’re a business or a high-net-worth individual, it’s time to act. With some OBBBA provisions applying retroactively or expiring quickly, timing can mean the difference between maximizing benefits and leaving money on the table. Learn how our tax experts can help you capture every advantage — before any window closes.
Get a free one-on-one consultation to assess your needs and next steps to help you reach your strategic tax goals.
