OBBBA 2025: Key Tax Law Changes Impacting Business Owners and Tech Companies
- Amanda Garcia
- Nov 6
- 3 min read
Understanding the OBBBA and What It Means for Businesses
The One Big Beautiful Bill Act (OBBBA) represents one of the most significant overhauls of U.S. tax policy in recent years. Passed in July 2025, the law makes permanent many of the lower tax rates from the Tax Cuts and Jobs Act (TCJA).
More importantly, it introduces several business-focused tax changes that affect how U.S. companies invest, finance, and innovate.
For business owners and technology companies, these updates carry major planning implications. From the more favorable Section 163(j) interest limitation to the reinstatement of immediate domestic R&D expensing, the rules ahead will influence capital spending, innovation, and business strategy.
Section 163(j): Expanded Business Interest Deduction Limits
The OBBBA permanently revises Section 163(j), the rule limiting the deduction of business interest expense.
Starting in 2025, a new law (OBBBA) permanently changes how businesses calculate their limit on interest deductions. Companies can now exclude depreciation, amortization, and depletion when figuring out this limit, which means many will be able to deduct more interest on their taxes each year.
Industries that rely on corporate borrowings, such as manufacturing, construction, and technology, will benefit from this change. This is a positive change, especially given the increase in interest rates.
Tax Tip: Model your company’s capital structure under the new §163(j) definition of ATI. Reviewing financing arrangements and timing of asset acquisitions to maximize interest deductions.
R&D Expensing 2025: Immediate Deduction for Domestic Innovation
A major win for the tech and innovation community, the OBBBA restores the ability to immediately deduct domestic (US-based) R&D costs. This is huge!
For tax years beginning after December 31, 2024, companies can once again expense domestic research and experimental expenditures under Section 174. Capitalizing and amortizing these costs is also still an option. The changes under the OBBBA offer greater flexibility in treatment for domestic R&E expenditures, which is helpful from a planning perspective.
However, foreign R&D remains subject to 15-year amortization, underscoring the Act’s intent to encourage U.S.-based innovation.
Attention small businesses! Businesses with average annual receipts under $31 million can apply this change retroactively to 2022–2024 and may accelerate any remaining amortized costs over one or two years. This is a potential refund opportunity if you can model out the benefit.
Tax Tip: Review your R&D footprint now. Tech companies should document qualifying domestic research activities, re-evaluate where projects are conducted, and update expense tracking systems to maximize these
deductions. There is a lot you can do here, and documentation and the right
processes are key to support those valuable R&D credits.
Bonus Depreciation and Section 179 Expensing: Incentives for Domestic Investment
The OBBBA permanently reinstates 100% bonus depreciation for property acquired after January 19, 2025, for qualifying assets.
The Act also created a new temporary rule allowing businesses to fully expense “qualified production property." This property is a type of building and is subject to certain criteria.
Expensing under the Section 179 deduction was also increased to $2.5 million, with a phaseout starting at $4 million of qualifying property (indexed for inflation in future years).
For growing tech firms investing in hardware, equipment, or domestic facilities, these provisions can deliver substantial tax savings.
Tax Tip: Plan the timing of capital purchases and model the benefit of full expensing vs. reduced bonus depreciation (e.g. 40%). Align asset acquisitions with your fiscal year and projected income to optimize
expensing benefits.
Qualified Small Business Stock Benefit Increased
Under the OBBBA, Qualified Small Business Stock (QSBS) has become significantly more favorable for founders and investors. For QSBS acquired after July 4, 2025, taxpayers may exclude:
50% of capital gains after a 3-year holding period
75% after 4 years
100% after 5 years
Tax advisors should anticipate heightened IRS scrutiny of QSBS claims under the revised framework.
Strategic Takeaways for Tech Companies and Business Owners
The OBBBA’s combination of restored higher interest deductions and more generous expensing rules requires integrated tax planning:
Section 163(j) may encourage more debt-financed growth.
Domestic R&D expensing restores liquidity and rewards innovation.
Bonus depreciation and Section 179 promote investment in U.S.-based assets.
QSBS changes make investment in small and growing C corporations more attractive
Plan Now to Maximize the OBBBA’s Benefits
Tax law changes can be challenging, but for proactive companies, they also create opportunities. By planning early, your business can leverage these new provisions to optimize cash flow, strengthen your balance sheet, and reinvest in growth.
Contact your tax adviser to:
Learn how the OBBBA affects your specific tax situation, and
Schedule a customized tax modeling session
Looking for Additional Resources?
Click here for your copy of the OBBBA business tax changes
Click here for your copy of the OBBBA individual tax changes
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