How the One Big Beautiful Bill Impacts Business Owners: A Strategic Overview

The One Big Beautiful Bill Act (OBBB), signed July 4, 2025, brings sweeping federal tax updates that will reshape your year-end planning. As your dedicated CAS partner, we’ve identified the provisions—bonus depreciation, Sec. 179 expensing, QBI deductions, new above-the-line breaks, and international rules—that matter most to your business. Read on to see exactly where our team will step in to model scenarios, streamline your systems, and turn each change into an actionable advantage.

Equipment Expensing and Investment Planning

Provision Overview: The bill permanently extends 100% bonus depreciation for qualified property acquired and placed in service on or after January 19, 2025, and raises the Section 179 expensing limit under the Internal Revenue Code to $2.5 million, with phaseouts beginning at $4 million. This allows businesses to deduct the full cost of certain capital assets, including equipment and machinery, in the year they are placed into service. These updates are designed to stimulate reinvestment and support capital-intensive industries.

Employer Planning Responsibilities: Business owners should coordinate with finance teams and tax advisors to evaluate the timing of asset purchases. Documentation of placed-in-service dates, proper asset classification, and coordination with project timelines are essential. Businesses should also assess whether current accounting systems accurately track depreciation and ensure compliance with new thresholds.

Section 199A Qualified Business Income (QBI) Deduction Made Permanent

Provision Overview: The Qualified Business Income (QBI) deduction under Section 199A under Section 199A allows eligible owners of pass-through entities to deduct up to 20 percent of qualified business income. The new law makes this deduction permanent and expands income thresholds, including a $400 minimum deduction.

Employer Planning Responsibilities: Business owners should reassess how they structure compensation and distributions. This includes reviewing W-2 wages, guaranteed partner payments, and overall entity structure. Proactive planning with tax professionals will help optimize the deduction and avoid phaseouts, particularly for businesses nearing income limits.

Above-the-Line Dedication for Tips and Overtime Compensation

Provision Overview: From tax years 2025 through 2028 (a temporary provision), individual employees can claim above-the-line deductions of up to $25,000 per taxpayer in reported tips and $12,500 per taxpayer in overtime wages under the new Section 62(a)(22), subject to phaseouts beginning at $150,000 of modified adjusted gross income. The deductions apply only to amounts properly reported and paid through payroll.

Employer Planning Responsibilities: Employers must ensure their payroll systems accurately capture overtime and tip income, with clear records and W-2 documentation. Updating employee handbooks, providing training on tip reporting, and ensuring time-tracking compliance are critical steps. Employers should also consider informing employees of this benefit during tax season or through internal communications.

Interest Deduction on U.S.-Assembled Vehicles

Provision Overview: Between 2025 and 2028, individuals may deduct up to $10,000 of interest paid on loans for U.S.-assembled personal-use vehicles under Section 163(j)(11). This applies to personal-use vehicles that meet assembly and purchase criteria. The deduction phases out for MAGI over $100,000 ($200,000 for joint filers).

Employer Planning Responsibilities: Business owners using personally owned vehicles for business purposes must carefully document vehicle use and purchase details. Although the deduction does not apply to business-use vehicle interest, employers with reimbursed vehicle use policies should ensure clarity on tax treatment and may consider offering educational resources to employees regarding eligibility and recordkeeping.

Above-the-Line Charitable Deduction for Non-Itemizers under Section 62(a)(21)

Provision Overview:
Beginning in 2025 and through 2028, individuals who do not itemize will be eligible for a limited above-the-line deduction of up to $150 for single filers or $300 for joint filers for qualified cash contributions to charities. This reinstated deduction provides a modest incentive for non-itemizers to support charitable causes without having to forgo the standard deduction. This provision replaces the earlier proposals for a broader or permanent deduction and reflects a compromise reached in the final legislation.

Employer Planning Responsibilities:
Business owners should take note of the temporary nature and modest size of this deduction when developing employee giving campaigns or philanthropic initiatives. While the benefit is relatively limited, it may still encourage participation in charitable programs. Employers should coordinate with advisors to assess how charitable contributions by owners or employees intersect with broader tax planning and communications strategies. Promoting a culture of giving remains valuable for brand reputation and internal engagement, even as tax incentives fluctuate.

International Tax Changes: Net CFC Tested Income and BEAT

Provision Overview: The bill renames Global Intangible Low-Taxed Income (GILTI) as Net CFC Tested Income and FDII as Foreign-Derived Deduction Eligible Income, while reducing the respective deductions to 40% and 33.34%. The Base Erosion and Anti-Abuse Tax (BEAT) is permanently set at 10.5%, replacing the previously scheduled 12.5% increase.

Employer Planning Responsibilities: Business owners with international supply chains or foreign subsidiaries should immediately assess their exposure. This includes reviewing transfer pricing policies, earnings repatriation plans, and intercompany contracts. The bill retains existing BEAT offset rules, which may require reevaluation of credits and intercompany flows. Consulting international tax professionals to run modeling scenarios will be essential for maintaining compliance and avoiding surprise liabilities.

Turning Legislative Change into CAS-Powered Results

These tax-code enhancements offer real savings—but only with proactive, expert guidance. Now is the time to convene your CAS advisory team to map out asset-purchase timing, entity-structure tweaks, employee communications and global-tax strategies. Together, we’ll deploy our proprietary checklists, modeling tools and reporting frameworks to capture every deduction, keep you compliant and fuel your long-term growth.

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