Key Business Tax Changes
Qualified Business Income( QBI) deduction. Makes permanent and expands the 20 % QBI deduction for owners of pass-through entities( such as partnerships, limited liability companies and S corporations) and sole proprietorships.
Bonus depreciation. Makes permanent 100 % bonus depreciation for the cost of qualified new and used assets, for property acquired after Jan. 19, 2025.
New deduction for“ qualified production property.” Creates a 100 % deduction for the cost of“ qualified production property” for qualified property placed into service after July 4, 2025, and before 2031.
Section 179 expensing. Increases the Sec. 179 expensing limit to $ 2.5 million and the expensing phaseout threshold to $ 4 million for 2025, with annual inflation adjustments going forward.
Business interest deduction cap. Increases the cap on the business interest deduction by excluding depreciation, amortization and depletion from the calculation of“ adjusted taxable income.”
Domestic research and experimental expenditures. Permanently allows the immediate deduction of domestic research and experimentation expenses( retroactive to 2022 for eligible small businesses).
Pass-through entity“ excess” business losses. Makes permanent the excess business loss limit.
Employee retention tax credit claims. Prohibits the IRS from issuing refunds for certain Employee Retention Tax Credit claims filed after Jan. 31, 2024.
Clean energy tax incentives. Eliminates clean energy tax incentives, including the qualified commercial clean vehicle credit, the alternative fuel vehicle refueling property credit and the Sec. 179D deduction for energy-efficient commercial buildings.
Opportunity Zones. Permanently renews and enhances the Qualified Opportunity Zone program through 2033.
New markets tax credit. Permanently extends this credit, which encourages private investments in low-income communities.
Employer-provided child care credit. Permanently increases the maximum employer-provided child care credit to $ 500,000($ 600,000 for small businesses), with annual inflation adjustments.
Employer credit for paid family and medical leave. Makes this credit permanent and modifies it several ways, including how it’ s calculated and who is a“ qualified employee.”
Employer payments of student loans. Makes permanent the exclusion for employer payments of student loans, with annual inflation adjustments to the maximum exclusion beginning in 2027.
Foreign-derived intangible income( FDII) and global intangible low-taxed income( GILTI) deductions. Makes permanent the FDII and GILTI deductions and the minimum base erosion and anti-abuse tax( BEAT).
Qualified small business stock( QSBS) gain exclusion. Expands the QSBS exclusion for stock issued after the date of enactment.
Except where noted, these changes are effective for tax years beginning in 2025. JULY 2025 | 02