On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) became law, reshaping several core business tax rules, including those in the incentives and international tax landscapes. Below is a concise guide to the provisions most likely to affect closely held businesses, sponsors, and growth companies—and where to focus next.

1. Interest expense limits (163(j)): back to EBITDA, with a new twist
   • For tax years beginning after December 31, 2024, the section 163(j) cap reverts to an EBITDA measure (generally allowing more interest than the current EBIT approach). But, effective for tax years beginning after December 31, 2025, OBBBA also brings capitalized business interest under 163(j) (unless it is required to be capitalized under sections 263(g) or 263A(f))—closing a common workaround that capitalized interest could avoid the limitation. Review 2026+ models and debt documents now; consider how the new ordering rule (generally calculating the section 163(j) limitation before application of interest capitalization provisions) affects cash tax and timing.
2. 100% bonus depreciation: permanent—plus a real-property expansion
   • OBBBA permanently restores 100% expensing for qualifying property acquired and placed in service on or after Jan. 19, 2025. It also creates temporary 100% expensing for certain “qualified production property”—specified U.S. nonresidential real property used in defined production activities—if construction begins after Jan. 19, 2025 and before Jan. 1, 2029, and the property is placed in service before Jan. 1, 2031. Capital-intensive manufacturers (including ag processing, chemicals, autos, and semiconductors) should map capex projects to these windows. 
3. R&E (section 174): current expensing is back (domestic), with limited retro relief
   • For tax years beginning after Dec. 31, 2024, domestic R&E may again be expensed currently (or capitalized by election). Foreign R&E remains 15-year amortization. Under one special transition rule, certain small businesses can retroactively expense domestic R&E for tax years beginning after Dec. 31, 2021—a refund opportunity worth exploring but which requires amending tax returns or a change in accounting method. For all taxpayers that paid or incurred domestic R&E expenses after Dec. 31, 2021 and before Jan. 1, 2025, a second special transition rule effective for tax years after Dec. 31, 2024 permits an election to deduct the remaining unamortized balance of domestic R&E expenses over a period of  one or two tax year(s),
4. QSBS (section 1202): faster tiers, bigger caps, broader access
   • For stock acquired after July 4, 2025, OBBBA replaces the five-year wait with a 3/4/5-year framework: 50% exclusion at 3 years, 75% at 4, 100% at 5. It also raises the issuer’s gross-assets cap to $75M (from $50M) and lifts the gain cap to the greater of $15M or 10× basis (except for taxpayers that fully utilized the exclusion amount in a prior year), indexed for inflation from 2027. Growth-stage companies and early-stage investors should tighten cap-table/QSBS tracking now, especially across follow-on rounds.
5. 199A: pass-through deduction expanded and made permanent
   • Owners of qualifying pass-throughs get long-term certainty: the 20% 199A deduction is extended and made permanent (not increased to 23% as earlier drafts floated). The OBBBA also increased the taxable income limitation phase-in amounts to $100,000 to $150,000 for joint returns ($50,000 to $75,000 for separate filers). Finally, the OBBBA changes include a $400 minimum deduction amount for active QBI of at least $1,000 (amounts to be increased for inflation in following years). Re-test blocker structures and owner-level models.
6. International tweaks: steadier rules, fewer cliffs
   • GILTI / NCTI:
     • Effective for tax years beginning after Dec. 31. 2025:
       1. The GILTI regime is reshaped by removing the qualified business asset investment (QBAI) reduction to GILTI, and renaming the inclusion as a taxpayer’s net CFC tested income (NCTI). 
       2. The statutory deduction under section 250 for a taxpayer’ total NCTI and associated section 78 gross-up amount is reduced to 40% (versus prior 50%) for tax years beginning after Dec. 31, 2025. 
       3. The OBBBA further trims the deemed paid foreign income tax haircut to 10% (instead of the prior 20%) with respect to NCTI. 
       4. Deductions allocated and apportioned to a taxpayer’s NCTI inclusion for foreign tax credit limitation purposes are confined to: (a) the section 250 deduction associated with the NCTI inclusion; and (b) any additional deductions directly allocable to the NCTI inclusion. Specifically, no interest expense or R&E expense amounts are allocated or apportioned to NCTI for foreign tax credit  limitation purposes.
     • Finally, the OBBA adds a new 10% disallowance for taxes paid or deemed paid on any previously taxed earnings and profits (PTEP) distributions of NCTI after June 28, 2025. 
   • FDII / FDDEI:
     1. Effective for tax years beginning after December 31, 2025:
        1. The OBBA also strikes the QBAI adjustment from the FDII framework.
        2. The OBBA permits deduction of 33.34% of the corporation’s total foreign-derived deduction eligible income (FDDEI) – dispensing with the prior FDII measure.
        3. Interest expense and R&E expense are no longer allocated or apportioned for purposes of calculating DEI and FDDEI.
     2. Effective for transactions after June 16, 2025, certain categories of income are not treated as deduction eligible income (DEI) or FDDEI – for instance gain from sale or disposition (or deemed) of intangible property (see section 367(d)(4)) or any other property subject to seller depreciation, amortization or depletion.
   • BEAT: Effective for tax years beginning after Dec. 31, 2025, the BEAT rate is increased to 10.5% for most taxpayers (11.5% for specific banks and securities dealers). 
     
     Cross-border groups should re-test ETRs and foreign tax credit positions under the revised definitions and mechanics.
7. What didn’t make the cut
   • Some headline items that weren’t included in the final law: (i) the headline U.S. corporate income tax rate of 21% is retained and made permanent (versus previously considered reductions); (ii) carried interest stays the same (the Tax Cuts and Jobs Act (TCJA) three-year holding period rule for long-term capital gains tax treatment still applies), and (iii) the proposed “revenge tax” (section 899) on residents of “unfair foreign tax” jurisdictions was dropped.

Quick action list (Q3–Q4 2025)

• Debt & LBO models: Re-run section 163(j) under EBITDA for 2026+; factor in the elective capitalized-interest inclusion and the new ordering rule. 
• Capex timing: Align construction and placed-in-service dates to capture qualified production property expensing; adjust procurement/contractor timelines now.
• R&E cleanup: Separate domestic vs. foreign R&E; evaluate retro expensing/refund opportunities for small businesses and accelerated relief for others.
• QSBS hygiene: Confirm issuer status, asset levels, and issuance dates; build tracking for the new 3/4/5-year tiers and higher gain caps.
• Re-evaluate global structures with fresh ETR calculations based on the latest GILTI / NCTI, FDII / FDDEI, and FTC limitation changes. 

Bottom line: OBBBA offers meaningful cash-tax savings opportunities (bonus depreciation / section 168(k), R&E expense deduction / section 174, QBI deduction / section 199A, QSBS exclusion / section 1202) while limiting others (prior section 163(j) capitalization workaround). Savvy business taxpayers will time projects and transactions to the statute’s effective dates, conduct appropriate diligence, and prepare documentation accordingly.

This post provides general information and does not constitute legal or tax advice.

Questions or want a tailored OBBBA impact review?

Contact Nick Eusanio, Partner, Tax Planning & Compliance — DBL Law