This article is sponsored by RSM.
The One Big Beautiful Bill Act (OBBBA) contains tax provisions designed to help businesses save money. Companies should explore how business tax benefits in the OBBBA align to their strategy in the following five areas:
- Capital investments
- Research and development
- Debt financing
- Entity structure
- Investment in small businesses
The OBBBA includes several tax provisions that could offer meaningful savings this year—especially for middle market businesses. While the legislation is complex and comes with eligibility rules, here are five practical ways it could benefit your bottom line.
1. Immediate write-offs for capital investments
What has changed: The OBBBA extends indefinitely the ability for businesses to fully deduct the cost of qualifying equipment and property, such as machinery, in the year it’s purchased and placed in service.
Why it matters: Instead of spreading deductions over several years, your company can now realize the full tax benefit right away.
How you could benefit: This boosts cash flow and makes it more affordable to invest in the tools and infrastructure your business needs to grow.
2. More generous tax treatment of R&D expenses
What has changed: The OBBBA extends indefinitely the ability for businesses to fully deduct certain domestic R&D expenses in the year they occur, rather than requiring the deductions to be spread out over five years.
Why it matters: If your company invests in innovation—whether through product or software development, process improvements, or technology upgrades—you can now deduct those costs immediately.
How you could benefit: Immediate deductions reduce your tax bill in the year the expenses occur. They improve your cash flow and reduce the immediate financial burden of critical investments in new products, technologies or processes that help you compete in the marketplace.
3. Higher limits on interest deductions
What has changed: The OBBBA raises the cap on how much interest a business can deduct, allowing companies to write off a larger portion of their borrowing costs.
Why it matters: If your company uses debt to finance growth or operations, this change makes borrowing more tax-efficient.
How you could benefit: Larger deductions for interest expenses reduce your taxable income, which is especially helpful during periods of expansion or elevated interest rates and prices.
4. Continued favorable tax treatment for certain pass-through businesses
What has changed: The OBBBA makes permanent a popular deduction for owners of certain pass-through businesses, such as partnerships, S corporations and LLCs.
Why it matters: Many middle market companies are structured as pass-throughs as opposed to C corporations. This deduction could effectively lowers the tax rate on a portion of your business income.
How you could benefit: By reducing your taxable income, your company retains more capital for reinvestment, hiring, or distribution to stakeholders.
5. Tax-favored gains on selling stock in small businesses
What has changed: The OBBBA enhances the tax benefits available when selling stock in certain small businesses. The new law also makes it easier to qualify for partial or full exclusion of gains.
Why it matters: If your company is structured as a C corporation and meets certain criteria, then investors—including founders and key employees—can exclude from federal taxes some or all of the gain when they sell their shares.
How you benefit:
- Faster benefits: Investors can now get a tax break after holding the stock for just three years instead of five, with bigger breaks the longer you hold it.
- Bigger savings: The amount of gain investors can exclude from taxes has increased.
- Broader qualification: The rules now apply to a wider range of businesses, so your company and its investors are more likely to benefit.
These changes make equity ownership in qualifying businesses more attractive and tax-efficient, especially for founders, early employees, and investors planning for a future exit.
How your business can take advantage of OBBBA tax benefits
While these and other OBBBA tax provisions represent significant opportunities, they also come with eligibility rules and planning considerations. Here’s what you can do now:
- Talk to your tax advisor to assess how these changes align with your business objectives.
- Review your capital investment, R&D and financing plans to align with the new incentives.
- Model your tax position under the new rules to identify savings opportunities.