OBBB Act: Key Corporate Planning Strategies for Tax Pros

The One Big Beautiful Bill Act (OBBBA) has brought sweeping tax changes with significant implications for corporations. The final legislation is reinstating benefits, revising prior rules, and introducing entirely new opportunities for businesses. Here’s a breakdown of the key provisions and what they mean for corporate tax planning going forward.

Permanent Full Expensing for Business Property

One of the most significant changes is permanent 100% bonus depreciation for qualified business property, eliminating the previous phase-down schedule under IRC 168(k).

Corporations can now immediately deduct the full cost of qualified property (with a recovery period of 20 years or less) placed in service after January 19, 2025, instead of depreciating it over time. This change accelerates deductions, boosts cash flow, and encourages capital investment in equipment, machinery, and other tangible assets.

Increased Section 179 Expensing Limits

The OBBBA also increases Section 179 expensing limits to:

• Annual limit: $2,500,000

• Phase-out threshold: $4,000,000

  
  

Both amounts will be indexed for inflation. These higher limits make it easier for corporations—particularly small and medium-sized businesses—to expense qualifying property in the year it’s placed in service rather than depreciating it over time.

Full Expensing of Domestic Research and Experimental Expenditures

To promote innovation, the Act allows full and immediate deduction of domestic R&D costs under new IRC 174A, reversing the previous five-year amortization requirement.

• Small business taxpayers (per section 448(c) gross receipts test) can apply this change retroactively to tax years beginning after December 31, 2021—potentially amending prior returns.

• All taxpayers that capitalized R&D between January 1, 2022, and December 31, 2024, can accelerate unamortized deductions over one or two years.

• Businesses may still elect to amortize domestic research over at least 60 months.

• Note: Foreign research remains subject to 15-year amortization.

  
  

Restoration and Enhancement of Business Interest Deduction

Adjusted taxable income will now permanently exclude depreciation and amortization deductions, increasing the amount of interest expense deductible under section 163(j).

Additional changes include:

• Expanded definition of “motor vehicle” to include certain trailers and campers for floor plan financing interest.

• Business interest limitations applied before capitalization of interest under sections 263(g) or 263A(f).

  
  

Effective dates:

• Exclusion of depreciation/amortization: after December 31, 2024

• Other interest limitation changes: after December 31, 2025

  
  

Special Depreciation Allowance for Qualified Production Property

To encourage U.S. manufacturing, the OBBBA introduces 100% expensing for certain nonresidential real property used in qualified production activities (IRC 168(n)).

This applies to domestic property used in manufacturing, production, or refining that is constructed and placed in service between January 19, 2025, and January 1, 2031.

Employer-Provided Childcare Credit

The Act significantly enhances the Section 45F childcare credit:

• Credit percentage increases from 25% to 40% of qualified childcare expenses.

• Maximum credit rises from $150,000 to $500,000, indexed for inflation.

• Eligible small businesses (using a 5-year average gross receipts test) get an enhanced 50% credit up to $600,000.

  
  

These provisions take effect for tax years beginning after December 31, 2025.

Corporate Charitable Deductions

A new 1% floor now applies to charitable contributions:

• Only the amount exceeding 1% of taxable income is deductible.

• The 10% overall deduction cap still applies.

• Contributions above the limit may be carried forward for 5 years, but the 1% floor applies in carryover years as well.

  
  

Final Thoughts

The OBBBA is one of the most comprehensive pieces of business tax legislation in recent years. While its size and complexity may seem daunting, understanding the core provisions can help corporations adapt strategies, take advantage of new opportunities, and strengthen their financial position.

With MyTAXPrepOffice, tax professionals can confidently navigate these changes. Our platform is designed to simplify corporate tax compliance, maximize available deductions, and streamline the preparation process—so you can focus on helping your clients make the most of the OBBBA’s benefits.

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Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.