The One Big Beautiful Bill Act, Explained in Plain English (for Businesses)

The One Big Beautiful Bill Act (OB3) delivers several long-awaited changes for business owners — some offering immediate tax relief, others reshaping how companies invest and reward employees. From expanded deductions to favorable treatment of R&D and equity, these updates could have a major impact on planning for 2025 and beyond.

Here are the key highlights:

• Return of 100% Bonus Depreciation & Expanded Section 179. Businesses can now fully deduct eligible assets in the year they’re placed in service — no more waiting years to recover costs through regular depreciation. This is the provision many owners had been hoping for.

• QBI Extension. The popular 20% Qualified Business Income (QBI) deduction is now permanent, continuing to benefit pass-through entities. Limitations still apply, but this offers welcome stability.

• R&D Expensing. OB3 reverses the 2022 rule requiring capitalization of R&D costs. Beginning in 2025 (and retroactively), companies can once again expense R&D in the year incurred, encouraging domestic investment and innovation.

• QSBS Expansion (Section 1202). The Qualified Small Business Stock (QSBS) exclusion has been expanded. The lifetime cap has doubled from $10M (or 10× basis) to $20M (or 20× basis), and a new rolling 3-year partial exclusion has been added. More corporations and investors may now qualify, creating stronger incentives for startup investment.

• No Tax on Tips and Overtime. Employees in hospitality and service industries benefit from new above-the-line deductions:

  • Tips: Up to $25,000 per year, subject to income limitations.

  • Overtime: Up to $12,500 per year (or $25,000 for joint returns), also subject to income limits.

• Termination of “Green” Subsidies. Several energy-related subsidies and credits have been phased out, signaling a shift in incentives and requiring businesses to reevaluate prior tax strategies tied to renewable or green investments.