Major federal bill signed into law — Preserving tax cuts, fueling growth

Advocacy News – July 9, 2025 

What happened: Last week, Congress passed and the President signed the One Big Beautiful Bill Act (OBBBA) – a major tax and economic package that makes key portions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent, while introducing new reforms aimed at boosting growth and simplifying the tax code.

Why it matters: The bill prevents what would have been one of the largest tax increases in U.S. history when the TCJA was set to expire in 2025.  By locking in long-term tax relief for businesses and workers, the OBBBA aims to create a more stable economic environment – helping employers plan, invest and grow with confidence.

• To offset the cost of these provisions, the bill scales back spending on Medicaid and other federal programs like clean energy initiatives. These provisions have sparked concern among health care providers and others.

Key highlights for business:

1. Permanent corporate tax rate reduction. The OBBBA maintains the 21% corporate tax rate established under the TCJA, making it permanent. This move eliminates uncertainty for corporations that had been facing a potential rate increase after 2025. The permanence of this rate is expected to encourage long-term investment and planning by U.S. businesses.
2. Full expensing for capital investments. One of the most business-friendly provisions is the extension and permanence of 100% bonus depreciation for qualified capital investments. Originally set to phase out after 2022, this provision allows businesses to immediately deduct the full cost of machinery, equipment and other capital assets, significantly reducing taxable income and encouraging reinvestment.
3. Expansion of the Section 199A deduction. The bill extends and enhances the 20% deduction for qualified business income for pass-through entities such as S-corporations, partnerships and sole proprietorships. The income thresholds for phaseouts have been increased, allowing more small and medium-sized businesses to benefit from the deduction.
4. Research and Development (R&D) incentives. The OBBBA reverses the TCJA’s requirement to amortize R&D expenses over five years. Instead, it restores the ability to fully expense R&D costs in the year incurred, a move widely supported by the tech and manufacturing sectors. This change is expected to boost innovation and domestic R&D spending.
5. International tax reforms. The bill includes adjustments to the Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII) regimes, reducing the effective tax rates and aligning them more closely with OECD standards. These changes aim to make U.S. multinational corporations more competitive globally.
6. Simplified accounting rules for small businesses. The OBBBA raises the gross receipts threshold for using the cash method of accounting from $25 million to $50 million, easing compliance burdens for more small businesses. It also expands eligibility for simplified inventory accounting and exemption from uniform capitalization rules.

The bottom line:  The OBBBA makes permanent a number of tax cuts that were set to expire. This will allow businesses to reinvest and grow, creating jobs and economic opportunity.

For questions or more information, contact Randy Gross.