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. Property placed in service prior to this date is subject to the same phaseout percentage under old law – 40 % for property in placed in service after Dec. 31, 2024, and before Jan. 19, 2025. Learn more about bonus depreciation and its transition rules on page 6.
• New deduction for qualified production property( QPP). Creates a 100 % deduction for the cost of QPP for qualified property placed into service after July 4, 2025, and before 2031. More details related to QPP can be found page on 9.
• Section 179 expensing. Increases the 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. Reverts to pre-2022 rules limiting interest deductions to 30 % of earnings before interest, taxes, depreciation and amortization( EBITDA),( instead of EBIT), with revised income ordering and foreign-income exclusions clarified.
• Domestic research and experimental( R & E) expenditures. Permanently allows the immediate deduction of domestic R & E expenses( retroactive to 2022 for eligible small businesses). Foreign expenditures are still capitalized and amortized over 15 years. Learn about these changes on page 14.
• 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. The OBBBA also creates a rolling 10-year opportunity zone designation beginning in 2027, plus introduces reporting obligations for fund and investors.
• 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, plus renames them to Foreign-Derived Deduction Eligible Income( FDDEI) and Net CFC Tested Income( NCTI), respectively.
• Qualified small business stock( QSBS) gain exclusion. Expands the QSBS exclusion for stock issued after the date of enactment.
• 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.
VIEWPOINTS: ISSUE 2 2025 | 03