The business investment and provisions of the One Big Beautiful Bill Act (OBBBA) permanently codify 100% bonus depreciation and the Section 199A deduction. These changes allow business owners to immediately expense capital assets and reduce taxable income by 20% for pass-through entities. Consequently, these provisions provide long-term certainty for domestic R&D and capital scaling.
What are the Permanent Business Investment and Provisions?
Understanding the 2025 legislative shift is vital for every SMB owner. For years, tax planning felt like a moving target due to sunset clauses. However, the OBBBA changed the landscape. It solidified several temporary measures into permanent law. This stability allows for aggressive, multi-year growth strategies.
At TYS, we leverage over 60 years of tax accounting experience to navigate these waters. Whether you are searching for a tax accountant near me in Rochester, NY, or Walnut Creek California, our team ensures you capture every dollar.
Section 168(k): Permanent 100% Bonus Depreciation
One of the most powerful business investment and provisions is the restoration of 100% bonus depreciation. Under the previous schedule, this benefit was phasing out. Now, it is a permanent fixture of the tax code.
How It Works
When you purchase “qualified property,” you can deduct the entire cost in the first year. This applies to equipment, machinery, and certain interior improvements. Therefore, your Tax Basis in the asset drops to zero immediately. This creates a massive front-loaded tax shield.
Impact on Cash Flow
- Immediate Savings: You keep more cash in the business now.
- Reduced Liability: Your taxable income drops significantly.
- Asset Upgrades: You can replace old fleet vehicles or tech without waiting years for a write-off.
Section 199A: The Permanent 20% Pass-Through Deduction
Most small businesses operate as LLCs, Partnerships, or S-Corps. These are “pass-through” entities. The OBBBA made the Section 199A Qualified Business Income (QBI) deduction permanent. This is a cornerstone of the modern business investment and provisions.
Strategic Benefits
Eligible taxpayers can deduct up to 20% of their QBI from their taxable income. However, this deduction is subject to certain wage and property limitations. Because this is now permanent, owners can plan their compensation structures with total confidence.
| Feature | Impact of Permanency |
| Tax Rate | Effective top rate for pass-throughs stays near 29.6%. |
| Planning | No need to worry about the 2026 “tax cliff.” |
| Hiring | Predictable tax savings allow for better salary budgeting. |
R&D Expensing: Section 174 Reinstatement
Innovation is expensive. Previously, businesses had to amortize domestic Research and Development (R&D) costs over five years. The new business investment and provisions reinstate immediate expensing under Section 174.
Why This Matters for SMBs
If you develop new software or improve manufacturing processes, you can now deduct those costs in the year you incur them. This change directly boosts domestic innovation. It removes the “tax penalty” for trying to build better products in the U.S.
Specialized Accounting for Construction and Industry
For our construction clients, these business investment and provisions interact deeply with Section 460. Managing a WIP (Work in Progress) Schedule requires precision. You must track Over/Under-billing to ensure your financial statements remain accurate for bonding and bank requirements.
Our experts analyze your Tax Basis and cash positions daily. We don’t just “do taxes.” We build a financial foundation. If you need a business tax preparer near me, TYS provides the technical depth required for complex industries.
Summary of Key Changes
- Bonus Depreciation: 100% deduction for qualified property is now permanent.
- Section 199A: The 20% QBI deduction will not expire.
- R&D Costs: Domestic research is fully deductible in Year 1.
- Stability: Business owners can now execute five-year and ten-year plans.
The business investment and provisions of the OBBBA represent a “pro-growth” environment. However, you must document your expenses correctly. The IRS remains vigilant regarding the classification of “qualified property.”
Expert Q&A: Navigating the OBBBA
Q1: Does 100% bonus depreciation apply to used equipment?
A: Yes. Under the current business investment and provisions, bonus depreciation applies to both new and used “qualified property.” However, the property must be “new to you.” It cannot be acquired from a related party.
Q2: What happens if my QBI deduction exceeds my taxable income?
A: If your 199A deduction is more than your taxable income (minus net capital gains), the deduction is limited. The excess does not carry forward. This makes year-end timing critical.
Q3: Can I still use Section 179 alongside bonus depreciation?
A: Absolutely. Many businesses use Section 179 for specific equipment up to a certain dollar limit. Then, they use bonus depreciation for the remaining balance. We help you choose the best sequence for your specific bracket.
Q4: Does the R&D expensing apply to foreign research?
A: No. The immediate expensing under the new business investment and provisions applies specifically to domestic (U.S.-based) research and development. Foreign R&D must still be amortized over 15 years.
Contact TYS today at our Rochester, NY or Walnut Creek, CA offices to ensure your business maximizes these permanent tax advantages.