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1. Making Key Provisions Permanent
OBBBA cements several TCJA-era tax provisions for businesses, including:
- 100% bonus depreciation,
- R&D expensing (immediate deduction),
- Section 199A passthrough deduction, and
- Relaxed limits on business interest expense deduction.
These extensions offer businesses long-term certainty for capital planning.
2. 100% Bonus Depreciation Preserved
The provision allowing businesses to fully expense qualified assets in their first year remains intact—valued for its immediate cash-flow benefits.
3. R&D Expensing Restored
Unlike the prior five-year amortization requirement, OBBBA fully returns immediate expensing of new—and retroactive expensing of unamortized—R&D costs. Tech giants praised this move.
4. Section 179 Expensing Raised to $2.5M
The annual maximum for rapid write-offs under Section 179 increases to $2.5 million, empowering businesses to deduct more asset purchases upfront.
Business Interest Deduction Rules Relaxed
5. Permanent EBITDA Add-Back for Interest Limits
OBBBA restores EBITDA-based calculations for Section 163(j), loosening interest expense caps and providing greater flexibility—especially for capital-intensive industries.
Sector-Specific Incentives & Credits
6. Boosted Credits for Semiconductor & Qualified Production
- The semiconductor production credit rises to 35% starting January 2026.
- Businesses may now fully expense qualified production property, including structures (e.g., factories, data centers) in service during 2025–2028, encouraging domestic investment and reshoring.
Auto Loan Interest Deduction (Business Applicability)
7. Deductible Auto Loan Interest for Businesses
While generally aimed at individuals, OBBBA allows up to $10,000 of interest on auto loans (U.S.-assembled vehicles) to be deducted—even for non-itemizers. It phases out for MAGI above $100K/$200K (single/joint). Businesses that use such vehicles may benefit depending on eligibility.
Business Planning, Sector Breaks & Nuances
8. Windfalls & Free Cash Flow Boosts
Major companies (e.g., AT&T, Meta, Amazon) are expected to realize tens of billions in cash tax savings, feeding investments, buybacks, and debt reduction. OBBBA projections: bonus depreciation alone could cost the Treasury $350B over 10 years; interest deduction relaxation estimated at $61B over a decade.
9. Affordable Housing & Coal Credits
The bill expands the Low-Income Housing Tax Credit, enabling up to 1.22 million new affordable units over 2026–2035. It also introduces a 2.5% metallurgical coal tax credit.
10. Impact on Healthcare & Other Sectors
Enhanced deductions may help hospitals, yet Medicaid cuts could strain healthcare providers—a mixed outcome for the sector.
Strategic Tax Planning Considerations
- Depreciation Timing: With bonus and Section 179 strong, businesses must strategically time asset purchases for maximum tax efficiency.
- IRAs & Executive Compensation: Additional cash flow may shift retirement, deferred comp, and incentive structures.
- Charitable Giving & Compliance: Free cash flow boost may invigorate corporate philanthropy, but reporting and employer notices for auto deduction require new compliance protocols.
- Sector-Specific Breaks: Industries like clean energy may explore metallurgical coal or affordable housing credits; others (tech, semis) benefit from R&D and production incentives.
- Legislative & Fiscal Risk: Long-term deficit impact ($2–4 trillion) raises policymaker concerns, potentially affecting future tax landscape.
Schedule a Consultation
Call Saltzman Mugan Dushoff at 702-330-3441 or email info@nvbusinesslaw.com to schedule a confidential consultation. We are Nevada’s leading tax attorneys, let us simplify matters on your behalf.
Written by Cliff Capdevielle, Esq. | Saltzman Mugan Dushoff, PLLC | Nevada and California Licensed Tax Attorney
