Public Law 119-21, enacted in 2025 and often called the One Big Beautiful Bill Act, changes several important business-tax deductions and calculations. It does not change the general federal income-tax rate for C corporations. The biggest effects are on when businesses can deduct certain costs, how some interest deductions are limited, and how eligible owners of pass-through businesses claim a deduction. Which provisions apply depends on the entity, tax year, and qualifying property or expenses.
1. Permanent 100% bonus depreciation can move deductions forward
What changed
Eligible property acquired after January 19, 2025, may qualify for 100% additional first-year depreciation. In practical terms, a business may be able to deduct the full eligible cost in the year the property is placed in service, rather than spreading depreciation over multiple years. The law makes this treatment permanent.
What it means for a business
A larger deduction earlier can reduce taxable income in the year of investment and improve near-term cash flow. It is an acceleration of deductions, not a cash grant or a general reduction in the corporate tax rate; taking deductions sooner can also mean fewer depreciation deductions in later years.
Not every purchase qualifies. The property’s classification, acquisition date, placed-in-service date, and statutory exceptions matter. Businesses should check the enacted rules and current IRS guidance before treating an asset as eligible.
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2. Domestic research costs can generally be deducted currently again
Domestic research and experimental expenditures
For tax years beginning after December 31, 2024, new section 174A generally allows domestic research or experimental expenditures to be deducted in the year paid or incurred. A taxpayer may instead elect to capitalize and amortize those costs under the statutory rules. The IRS summarizes the change this way: “So now, beginning in 2025, under the One Big Beautiful Bill, taxpayers can immediately deduct domestic R&E costs in the year they’re paid or occurred.”
Transition and foreign-cost rules
Businesses with domestic research costs capitalized for 2022 through 2024 may have transition options, including procedures described in IRS guidance for changing accounting methods. Eligible small businesses have special treatment. The choice can affect deductions across multiple tax years, so accounting records and applicable elections matter.
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The current-deduction rule described above is for domestic expenditures. Foreign research costs have distinct treatment and should not be assumed to qualify for the same immediate deduction.
3. The business-interest limitation calculation changes
Depreciation, amortization, and depletion return to the ATI calculation
For tax years beginning after December 31, 2024, the law again allows depreciation, amortization, and depletion to be added back when calculating adjusted taxable income (ATI) for the section 163(j) business-interest limitation. This generally moves the ATI base toward EBITDA rather than EBIT. Because the limitation is tied to ATI, the change can permit a larger interest deduction for some businesses than the prior calculation did.
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The limitation remains, and a later CFC rule has a different start date
This is a change to how the limit is calculated, not elimination of the limit. The result depends on a business’s income, interest expense, applicable exceptions, and other facts. The IRS also says the law clarifies how section 163(j) applies to interest capitalized under provisions other than sections 263(g) and 263A(f).
Separately, for tax years beginning after December 31, 2025, specified controlled foreign corporation (CFC) inclusion items and related deductions are excluded from a U.S. shareholder’s ATI computation. That later change is relevant to certain multinational structures and should not be conflated with the 2025 ATI calculation change.
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4. Section 199A is permanent for eligible pass-through owners, not C corporations
Who may claim the deduction
The law makes the section 199A qualified business income deduction permanent and generally retains its 20% rate, while amending eligibility mechanics and limitations. The IRS describes potentially eligible claimants as owners of sole proprietorships, partnerships, S corporations, trusts, and estates, subject to the rules that apply to their circumstances.
Why entity type matters
A C corporation cannot claim the section 199A deduction. The deduction belongs in a discussion of pass-through business taxation and owner-level tax treatment; it is not a new deduction for C-corporation income. The 20% figure is the general deduction rate, not a guarantee that every eligible owner can deduct 20% of all business income.
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5. International-tax changes matter most to affected multinational groups
The law also changes international-tax provisions, including rules associated with sections 951A and 250. Alongside the later CFC-related section 163(j) change, these provisions can affect U.S. shareholders and multinational groups, but their application depends on the specific rules and the group’s facts.
These changes do not support a blanket conclusion that the law raises or lowers every corporation’s tax bill. A company’s outcome depends on which provisions apply, its income and expenses, its international structure, and the effective date for each rule. The enacted text of Public Law 119-21 and current IRS guidance are the appropriate references for a provision-specific analysis.
How to assess the effect on a particular business
Start by identifying the entity and tax year, then match the relevant transaction to the rule: qualifying property for depreciation, domestic or foreign research costs, interest expense and ATI, or pass-through income claimed by an eligible owner. Confirm applicable dates, elections, exceptions, and accounting-method procedures before estimating the tax result. Accelerated deductions can change when tax is paid without necessarily reducing a business’s total tax over time.
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