OB3 Business Changes

On July 4, 2025, after several months of debate in the House of Representatives and Senate, President Trump signed the One Big Beautiful Bill (OB3) into law. This bill makes many of the provisions of the Tax Cuts and Jobs Act (TCJA) permanent, changes several individual, business, and international tax laws, and ends multiple clean energy credits.

Bonus Depreciation

•   100% bonus depreciation is made permanent for property placed in service after January 19, 2025.

Section 179 Expensing

• The Section 179 expensing limit is increased to $2.5 million beginning in 2025.

Research & Development (R&D) Expenses

• R&D expenses incurred in the U.S. after December 31, 2024, may be expensed immediately.
• Businesses with average annual receipts under $31 million may apply this provision retroactively to tax years beginning after December 31, 2021.

Business Interest Deduction

• The limitation is again based on EBITDA (earnings before interest, tax, depreciation, and amortization) for tax years ending after December 31, 2024.

Special Depreciation Allowance for Qualified Production Property

• A 100% special depreciation allowance applies to qualified production property (defined as nonresidential real property used in manufacturing).

Paid Family and Medical Leave Credit

• The employer credit for paid family and medical leave is made permanent.

Employer-Provided Child Care Credit

• The credit is increased to 40% of qualified expenses, up to a maximum of $500,000 (indexed for inflation).

Opportunity Zones

• Opportunity Zones are made permanent, with changes to the law, including the definition of “low income community.”

Qualified Small Business Stock (QSBS) Exclusion

• The exclusion from sale of qualified small business stock is increases from 50% to 75% for stock acquired after the passage of the bill and held for four years. For stock held for five years, 100% of the gain is excluded.
• For QSBS held for at least five years, 100% of the gain is excluded.

Excess Business Losses Limitation

• The excess business losses limitation of noncorporate taxpayers is made permanent.

Clean Energy Credits

• Several credits are terminated, including:
• Previously Owned Clean Vehicle Credit
• Clean Vehicle Credit
• Energy Efficient Home Improvement Credit
• Residential Clean Energy Credit

Third-Party Network Reporting (Form 1099-K)

• Reporting is only required if aggregate transactions exceed $20,000 and the number of transactions exceeds 200.

Form 1099-NEC and Form 1099-MISC Filing Threshold

• Form 1099-NEC and Form 1099-MISC filing threshold is increased from $600 to $2,000.

We expect additional guidance and clarification on some of these provisions in the coming months. As more information becomes available, we will keep you updated. In the meantime, if you have any questions about these new laws or any other tax matters, please contact us. We are here to help.