The "One Big Beautiful Bill Act" has introduced sweeping tax reforms that are challenging to decipher, especially for business owners trying to understand how the changes impact their operations. This guide aims to break down these changes from the new bill, building upon the 2017 Tax Cuts and Jobs Act, and offer clear takeaways for navigating these complex reforms.

Bonus Depreciation Returns

One of the most significant changes is the return of bonus depreciation, allowing businesses to permanently expense 100% of qualified capital assets acquired from January 20, 2025. This applies to manufacturing buildings placed in service before 2031, providing a substantial tax-saving opportunity for many companies.

Qualified Business Income Deduction

The 20% QBI deduction is now permanent, with expanded phase-in thresholds to $75,000 for single filers and $150,000 for joint filers. This change allows more businesses to benefit from this deduction, aiding in tax relief.

R&D Expensing Reinstated

The act reinstates full deductibility for domestic research costs and allows accelerated recovery of 2022–2024 capitalized R&D. However, it’s important to note that foreign R&D expenses must continue to be amortized, impacting businesses with international research operations.

Excise Tax on Remittances

Businesses involved in cash-based transfers abroad should be aware of a new 1% tax. However, methods such as bank and card transfers are exempt, mitigating some of the impact.

ERTC Enforcement Expansion

There is increased authority granted to the IRS regarding erroneous Employee Retention Credit claims. This expansion emphasizes the need for accurate reporting and understanding the penalties for missteps in tax filings.

Moving Forward with Compliance

While the One Big Beautiful Bill Act introduces numerous changes, proactive planning can make these adjustments less daunting. It's crucial for businesses to review their tax strategies with professionals to ensure compliance and optimize benefits under the new regulations.