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August 8, 2025 How to

How businesses can tackle tax implications of 'Big Beautiful Bill'

By Sage Friedman and Ryan Morse, Murray Plumb & Murray

On July 4, President Donald Trump signed into law the nearly 900-page “One Big Beautiful Bill Act.”  

Sage Friedman, Murray Plumb & Murray

The act includes a wide range of provisions that impact every type of taxpayer. For commercial entities, though, the most widely applicable items are those touching on depreciation and deduction rules for businesses or business owners. While the Act helped to clarify the permanence of many provisions of the 2017 Tax Cuts and Jobs Act, businesses, business owners and their tax advisors should still closely monitor the act’s effect on the bottom line.

100% bonus depreciation is back

The act significantly expands the benefits available to businesses under Section 168(k) of the tax code, permanently reinstating 100% bonus depreciation (from 40%) on qualifying property purchases placed in service after Jan. 19, 2025. Property generally qualifies when it is used in a trade or business and has a limited number of years that it is expected to generate income or value. It may include purchases like computer equipment, certain vehicles, or office furniture. Notably, bonus depreciation can create a net operating loss.

Section 179 expensing limits increased

Provided photo
Ryan Morse, Murray Plumb & Murray

Effective for qualifying property placed in service after Dec. 31, 2024, the act increases the maximum Section 179 deduction available to taxpayers to $2.5 million. The deduction is meant to support small and mid-size businesses purchasing machinery and equipment, computers, and other property purchased for use in their trade or business, who can use the section to lower their current-year tax liability rather than depreciating property over a longer timeframe. There is a dollar-for-dollar limitation placed on businesses that place into service more than $4 million worth of qualifying property in a tax year. Both the “cap” on the deduction and the limitation are adjusted for inflation. 

Qualified production property depreciation allowed

To encourage domestic manufacturing and production, a provision of the act allows taxpayers to deduct 100% of the adjusted basis of qualified production property (nonresidential real property) in the year it is placed in service. This new provision, Section 168(n), has a few caveats, including requiring the property to be placed in service in the U.S. or a U.S. territory and requiring the property to be considered integral to a qualified production activity (manufacturing, producing, or refining of tangible goods, resulting in a ‘substantial transformation’ of its original properties). The Department of the Treasury has been directed to issue regulations that provide more clarity to this provision. 

Qualified business income deduction made permanent 

The TCJA introduced Section 199A, which provided up to a 20% deduction for noncorporate taxpayers for qualified business income, subject to a number of limitations. Qualified business income is generally “pass through income,” that being business income reported on a personal tax return derived from an S corporation, partnership, sole proprietorship or LLC. Income limitations apply and are stricter for almost all service-based businesses. The act permanently extends this deduction, which would otherwise have expired after this year. 

Business interest deductibility rules relaxed

Under the act, business interest deductions under Section 163(j) are still limited to 30% of “adjusted taxable income,” as defined in Section 163, but that definition is now again calculated based on EBITDA, which is more favorable to businesses. Previously, and beginning in 2022, adjusted taxable income under Section 163(j) was calculated based on EBIT, which provides no add-back for depreciation or amortization. However, the act also includes language that stops certain tax planning strategies for businesses by requiring that capitalized interest be treated as business interest subject to Section 163(j)’s limitation, unless that capitalized interest must be capitalized under other sections of the tax code.

This article has provided only a glimpse at the changes that business owners should be prepared to factor into their planning related to the One Big Beautiful Bill Act. Businesses interacting with the Opportunity Zones program will want to review the changes that have taken place to the now-permanent program; similarly, businesses with an international presence will need to grapple with relatively broad changes in the tax code.

Business owners paying employees will want to understand that tax and overtime deductions for employees, as provided for in the act, are handled in the employee’s tax return and so should have no impact to their tax withholding practices.

With the help of a tax professional to guide them, though, businesses should feel comfortable knowing that many of the changes effected by the act are intended to bolster their ability to grow, regardless of size or market.
 

About the authors

Sage Friedman is a partner with Murray Plumb & Murray in Portland.  

Ryan Morse is a summer associate working with the corporate group. 

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