Key Business Tax Provisions in “One Big Beautiful Bill”

by | Jun 9, 2025 | Federal Tax, Tax News | 0 comments

As the Senate debates provisions passed by the House of Representatives, the One Big Beautiful Bill Act is expected to see some major changes. Track key business tax provisions here.

By Lindsay Haskell and Lauren Staub

On May 22, 2025, the House of Representatives passed the multi-trillion-dollar tax and spending package known as the “One Big Beautiful Bill Act”. The Act is meeting resistance in the Senate and is facing long odds, where concerns over the debt ceiling are making even some Republican lawmakers push back on the high costs and lack of fiscal responsibility of extending tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA) and other expensive provisions. In short, the Act that left the House is likely to see significant redlines in the Senate.

As passed in the House, the tax provisions of the Act would favorably adjust 163(j) deductions, extend 100% bonus depreciation, reinstate immediate expensing of R&D costs, establish another round of opportunity zones, increase the SALT cap, and make permanent lower rates in GILTI and BEAT. However, it would also introduce Section 899, a measure designed to retaliate against countries with tax policies that the U.S. views as harmful or discriminatory to American businesses and investments.

The Senate is expected to take up the Act in June 2025, with a target date of July 4, 2025, set for the bill’s enactment. Expect changes as lawmakers debate some key provisions, including Medicaid, the SALT deduction and child tax credit, among others that are likely to increase the debt ceiling.

When the Act left the House, these key business tax provisions had made the cut:

  • 163(j) Deductions. The definition of “adjusted taxable income” under section 163(j) is based on EBITDA (which is more favorable for taxpayers than EBIT under current law) for taxable years beginning after December 31, 2024 and before January 1, 2030.

Read more about calculations rules at TaxOps: IRS proposes calculation rules for GILTI, FDII, NOL, and carryforwards.

  • Bonus Depreciation. The proposed bill would provide 100% bonus depreciation through 2029 for property acquired after January 19, 2025 and before January 1, 2030. This would reverse the phased reduction introduced by TCJA beginning from 2024 to 2026, which potentially impacted taxpayer cash flows and increased taxable liabilities in earlier years. Section 179 remained a valuable tool in offsetting the reduction in bonus depreciation.

Read more at TaxOps: Tax Planning Through Expiring TCJA Provisions.

  • Research and Experimental Expenditures. The proposed Act would reinstate an immediate deduction for domestic research and experimental expenditure costs for tax years beginning after December 31, 2024, and before January 1, 2030. Of note, this is not the only route to reversing the damage of the 2017 tax reform law.

Read more at TaxOps: US Congress Considers Two Viable Options to Reverse Section 174 Amortization.

  • Foreign research costs: must continue to be capitalized and recovered over 15 years under the TCJA.
  • Opportunity Zones Reestablished. TCJA introduced the Opportunity Zone (OZ) program, encouraging investment in nearly 9,000 underfunded rural and urban communities through tax incentives. The House bill establishes a second round of OZs for taxable years 2027 through 2033, with modified benefits in temporary deferral of capital gains taxes, basis step-up (30% proposed in the second round), and exclusion of taxable income on new gains. The golden window of tax relief in the initial OZ investments expires in 2026. Have you prepared?

International Extension of Lower Rates

  • GILTI Provisions Made Permanent. The global intangible low-taxed income (GILTI)  effective tax rate would increase from 10.5% to 10.67%  for taxable years beginning after December 31, 2025 which is still more taxpayer favorable than the 13.125% effective tax rate, as prescribed by TCJA.
  • FDII Provisions Made Permanent. The foreign-derived intangible income (FDII)  effective tax rate would decrease to 13.335% for taxable years beginning after December 31, 2025 which is still more taxpayer favorable than the 16.406% effective tax rate, as prescribed by TCJA.
  • BEAT Made Permanent at Lower Rate. The current tax rate on the base-erosion and anti-abuse tax (BEAT) is made permanent at the current rate of 10.1% instead of increasing to 12.5% after 2025, as prescribed by TCJA.

Read more at Tax Planning Through Expiring TCJA Provisions.

Section 899  and Unfair Foreign Taxes

The Act introduces proposed Section 899, a provision aimed at penalizing foreign investors and entities from counties that the U.S. government deems to have “unfair foreign taxes.” These taxes are considered discriminatory or extraterritorial in nature and are perceived as disproportionately targeting U.S. persons or businesses. If enacted, the proposed modifications under Section 899 are expected to significantly increase the number of U.S. companies subject to BEAT.

These taxes would automatically be treated as “unfair” under the proposed law. Examples of unfair foreign taxes explicitly identified in the legislation include:

  • Digital services taxes (DSTs)
  • Diverted profits taxes (DPTs)
  • Undertaxed profits rules (UTPRs)

If enacted, Section 899 would authorize the U.S. to increase tax rates—up to an additional 20% (in 5% annual increments)–on certain forms of income earned by “applicable persons.” These include:

  • Passive income (dividends, interest, royalties, and rents)
  • Effectively connected income (ECI)
  • FIRPTA gains
  • Branch profits tax

The increased rates would apply to foreign individuals and entities who are tax residents of, or controlled by residents of, countries imposing “unfair” taxes. The earliest enactment date for this proposed provision would likely be the 2026 taxable year.

Country Examples by Tax Types

Digital services taxes. Countries with enacted or proposed DSTs include Canada, Denmark, France, India, Italy, Mexico, Poland, Portugal, Spain and the UK. These taxes typically target revenues from digital platforms, online advertising, and user data monetization.

Diverted profits taxes. Currently in effect in Australia and the UK, DPTs. The DPT aim to counteract aggressive tax planning that shifts profits away from the country of economic activity.

Undertaxed profits rules. As part of the OECD’s Pillar Two framework under the Global Anti-Base Erosion (GloBE) Rules, UTPRs are being implemented or considered by Australia, Canada, EU member states, Japan, New Zealand, South Korea, the UK and Thailand. These rules are intended to make sure large multinationals pay a minimum of 15% tax rate globally.  

We’re watching the debates closely to see how businesses will be impacted by the reconciliation process unfolding in Congress. We expect legislation to alter these provisions, requiring taxpayers to strategically plan to maximize benefits. Please reach out to your TaxOps Advisor  to stay ahead of change and position your business to take advantage of tax benefits.

Disclaimer: This content is for educational purposes only and is not intended, nor should it be relied upon, as legal, tax, accounting or investment advice. You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented. 

Talk to a Business Tax Advocate

Read more

Follow Follow