Key Insights from the ‘One Big, Beautiful Bill’ Webinar
When new legislation rolls out, especially one as sweeping as the recently passed ‘One Big, Beautiful Bill,’ there’s a lot of excitement, confusion, and critical need for interpretation.
Stambaugh Ness recently hosted a webinar, The ‘Big, Beautiful Bill’ Breakdown: What’s Coming & How to Prepare,” available on-demand, to break down what we know so far, and most importantly, what your business should be doing next.
The ‘Big, Beautiful Bill’ Breakdown: What’s Coming & How to Prepare Now Available On-Demand!
Gain critical, actionable insights to confidently navigate the new OBBB tax legislation and strategically position your AEC firm for accelerated success.
We’re still early in the implementation phase, and while the intended changes to tax law are clear, the devil is in the details, as the saying goes. We now need to look to rule makers to clarify and provide procedural steps for implementation. That said, here’s a recap of the key insights you need to know.
A Quick History: How We Got Here
The groundwork for this bill dates back to the 2017 Tax Cuts and Jobs Act (TCJA), which introduced a variety of business and individual tax cuts, many of which were set to sunset by the end of 2025. The ‘One Big Beautiful Bill‘ bill, which was just signed into law, resets the playing field making many of those expiring provisions permanent and introducing changes across business and individual taxation, incentives, and expensing.
What’s Staying: TCJA Provisions Made Permanent
- Flat Corporate Rate: The 21% flat corporate tax rate remains and is now permanently codified, replacing the old graduated system.
- ACA Penalty Repeal: The Affordable Care Act penalty tax is permanently removed.
- Expanded Deduction Landscape: Several key TCJA tax provisions (R&D expensing, bonus depreciation, and Qualified Business Income (QBI) deductions) are now permanent fixtures.
R&D Expensing: Game-Changer for Innovation Investment
One of the biggest wins in the bill is the return of full expensing for domestic research and experimentation (R&E) starting after December 31, 2024. This allows companies to immediately deduct eligible R&D costs, an enormous cash flow and strategic planning opportunity.
From the Webinar:
“Taxpayers can now go back to taking both the deduction of the expenses and the credit on the eligible costs. Like we said, this is huge.”
– Jennifer Nelson, CPA, MBA
Key elements include:
- Section 174A: Newly introduced for permanent expensing of domestic R&E
- Section 17 Amended: Foreign research costs must still be amortized over 15 years.
- Retroactive Opportunity: Small businesses (under $31M in average gross receipts for the prior three years) may choose to amend returns to capture deductions pre-2025.
- Expensing post 12/31/24:
- Firms over the $31M gross revenue can recoup the capitalized expense on returns filed for tax years beginning after 12/31/25 either fully in one year, or over the remaining amortization period.
- Firms under the $31 M gross revenue threshold can also elect to recoup the capitalized expenditures in the same manner as large taxpayers (in lieu of amending returns).
Interest Expense Limitation: Back to EBITDA
Under IRC Section 163(j), businesses can once again calculate interest deductibility based on EBITDA (earnings before interest, taxes, depreciation, and amortization), reversing the shift to EBIT. This is particularly meaningful for capital-intensive and highly leveraged businesses, increasing the amount of deductible interest.
From the Webinar:
“It is now allowed to go back to the EBITDA… It means that more businesses are going to be able to take a greater amount of their business interest.”
– Marla Miller, CPA, JD
Bonus Depreciation & Qualified Production Property
Bonus Depreciation
Reinstated to 100%, but only property acquired and placed in service after January 19, 2025.
Qualified Production Property (New Section 168N)
Allows 100% bonus depreciation for buildings used in qualified manufacturing and production industries, if they’re owner-used and construction begins after January 19, 2025, and before January 1, 2029, and placed in service through 2030.
Cost segregation studies will be more relevant than ever as firms look to accelerate deductions and improve tax positioning.
What is a Cost Segregation Study?
A cost segregation study is an in-depth, engineer-based analysis of the costs associated with the acquisition, construction, or renovation of a building. This strategic tax planning tool is designed to accelerate tax depreciation deductions and increase cash flow.
Section 179 Expensing: Increased Limits
The Section 179 deduction limit increased to $2.5M, with a phase-out beginning at $4M. This allows for full expensing of a broader range of assets, including some building improvements not eligible under bonus depreciation. Strategically pairing this with cost segregation and bonus depreciation can significantly enhance tax outcomes.
PTET Dedication: Still on the Table
Despite concerns, the Pass-Through Entity Tax (PTET) deduction remains intact. This allows certain owners of pass-through entities to deduct state taxes at the entity level, potentially bypassing individual State and Local Tax (SALT) deduction caps. This is still a valuable planning strategy, especially for those in high-tax states.
Additional Tax Provisions to Note
- Excess Business Losses for non-corporate taxpayers are now a permanent deferral item, converting to NOL carryforwards.
- Qualified Opportunity Zones have been extended, with new 10-year rolling designations focused more heavily on rural and low-income communities. However, the original QOZ designations ending in 2026 remain unchanged, so planning around gain recognition remains critical.
- Starting in 2026, Qualified Opportunity Funds will face significantly more stringent reporting rules with potentially steep penalties for noncompliance, including heavy reporting requirements.
What Else You Need to Know
While the headline provisions got much of the attention, several less-publicized but important tax changes are also part of this bill, and they could directly impact your business or your personal return.
179D Energy Efficiency Deduction: Not Dead, Yet
The 179D deduction for energy-efficient building construction or renovation is still available, but not permanently. Projects that begin construction after June 30, 2026, will no longer be eligible. So, if your project qualifies and construction starts before that cutoff, you can still leverage this powerful deduction.
Timing matters, so be strategic about when construction begins.
Green Incentives Winding Down
Several energy and environmental tax credits are being phased out at a faster-than-expected pace:
- 45L Credit (for energy-efficient residential properties: Ends after 2026
- Clean Vehicle Credits (new and commercial): End after September 30, 2025
- Alternative Fuel Vehicle Refueling Property Credit: Ends after June 30, 2026
- Clean Electricity Production & Investment Credits: Ends after December 31, 2027, for wind and solar
Employee Retention (Tax) Credit (ERC/ERTC) Crackdown
The IRS is now barred from making payments on ERC/ERTC claims for Q3 and Q4 of 2021 that were filed after January 31, 2024. In addition, penalties have been expanded and the statute of limitations extended to six years, a clear signal that enforcement is ramping up.
Individual Tax Changes: What to Expect
Rates & Brackets
No dramatic shifts here. The top marginal rate remains at 37%, and capital gains tax rates are unchanged. Inflation adjustments apply only to the 10% and 12& brackets, meaning many taxpayers will gradually creep into higher brackets over time due to lack of indexing.
New Deductions for Tips and Overtime
Two above-the-line deductions were introduced for the years 2025 – 2028:
- Up to $25,000 in Tips (cash or credit card equivalents)
- Up to $12,500 in Overtime Pay (or $25,000 for joint filers)
These will continue to be subject to FICA, state, and local taxes. Be prepared for new W-2 reporting requirements and potential amended payroll filings.
Standard Deduction & Senior Benefits
- Standard Deduction: $31,500 for married filing jointly
- Personal Exemptions: Still gone
- NEW $6,000 Senior Deduction (2025-2028): For qualified individuals over 65, phased out by income level
Child & Family Provisions
- Child Tax Credit: Increased from $2,000 to $2,200
- NEW Trump Savings Account: Up to $5,000 annual tax-free contributions for children under 18 (government contributes $1,000 for kids born between 2025 – 2028)
- Qualified Scholarship Contributions: New tax credit for donations to scholarship-granting organizations
SALT Deduction Relief
A big win for taxpayers in high-tax states: The SALT cap is increased to $40,000 (up from $10,000) starting in 2025. This phase goes back down in 2029, so take advantage while you can.
Estate Tax: No Changes (That’s Good News)
The estate and gift tax exemption remains in place and has increased to $15 million ($30 million per couple). This offers continued planning opportunities for high-net-worth individuals and families.
Planning Considerations: What You Should Be Doing Now
While this bill offers significant opportunities, there’s no one-size-fits-all approach. Here’s what we recommend:
Model Your Tax Scenarios
Especially around:
- Section 174 R&D: Firms under $31M in average gross receipts will have the option of amending 2022-2024 or accelerating capitalized expenses in 2025.
- If you are a pass-through entity, evaluation of past distributions and basis considerations are key.
- Bonus & Section 179 Depreciation: Time your capital expenditures to maximize deductions
- Overpayments: If you paid high estimated taxes for 2025 based on prior law, consider:
- 4th quarter and year-end cash planning will be critical
- Roth conversions
- Accelerated charitable giving
- Capital gains harvesting
- Increased retirement contributions
From the Webinar:
“Modeling is going to be the most important thing to determine the best strategy on the Section 174 R&D. Same with bonus or accelerated depreciation… Don’t let your overpayments go to waste.”
– Jennifer Nelson, CPA, MBA
Watch for State Nonconformity
Many states may not conform immediately (or at all) to federal changes. SN’s State and Local Tax Advisory team is watching these developments to learn how we can help you navigate this.
Stay Cautious on Amended Returns
Amending past returns can delay refunds, increase IRS scrutiny, and potentially shift benefits to different owner groups if there have been ownership changes. Consider your goals before filing.
Prepare for IRS Delays
Policy guidance is likely to lag. In the meantime, reputable advisors may offer differing interpretations. Patience, modeling, and informed decision-making are key.
Accelerate Your Success: Start Planning Now
We’re still digesting many of the nuances and awaiting more IRS guidance, but the direction is clear: this bill brings significant planning opportunities for businesses that are ready to act.
Whether it’s celebrating deductions, evaluating capital investments, or adjusting your tax posture, now is the time to model your scenarios and make confident, informed decisions. Our goal is to help you Accelerate Success in AEC.
Reach out to us today to start a conversation.
