The One Big Beautiful Bill Act (OB3) became law on July 4, 2025. Many of its tax rules apply to the 2025 tax year. Below is a summary of three key business tax changes for 2025.

Reinstatement of Bonus Depreciation

When businesses buy new assets, they usually want to deduct the cost as quickly as possible. But under normal tax rules, they must spread (depreciate) the cost over several years, depending on the type of asset.

The Tax Cuts and Jobs Act of 2017 (TCJA) allowed a faster option called “bonus depreciation.” This let businesses deduct 100% of the cost of qualified property—generally property with a recovery period of 20 years or less—if it was bought and put into use after September 27, 2017, and before January 1, 2023.

The TCJA then reduced this deduction:

  • 80% in 2023

  • Lower amounts in later years

  • No bonus depreciation at all starting in 2026

Bonus Depreciation (OB3 Update)

OB3 makes the 100% bonus depreciation rule permanent for qualified property bought after January 19, 2025. This means businesses can deduct the full cost of eligible property right away. However, taxpayers can choose not to use bonus depreciation if it doesn’t benefit them. For example, a business with net operating losses that might expire could decide to opt out.

New Rules for Qualified Small Business Stock (QSBS)

Before OB3, taxpayers could avoid paying capital gains tax when selling qualified small business stock (QSBS). If the stock was bought after September 27, 2010, and held for more than five years, the exclusion could be up to 100%. To qualify as QSBS, the stock had to come from a U.S. C corporation involved in certain approved businesses, and that corporation could not have more than $50 million in total assets at the time of issuing the stock.

OB3 changes these rules and makes them more flexible:

  • The stock must be acquired after July 4, 2025.

  • The corporation can now have up to $75 million in total assets before and after issuing the stock.

  • Taxpayers don’t always need to hold the stock for 5 years. Under OB3:

    • Holding for 3 years allows a 50% exclusion.

    • Holding for 4 years allows a 75% exclusion.

    • Holding for 5 years allows a 100% exclusion.

There are still limits, so anyone interested in the QSBS exclusion should consult a tax professional.

R&D Tax Rules

The tax treatment of research and development (R&D) costs has also changed over time.

  • Before 2022: businesses could deduct R&D costs immediately.

  • From 2022 onward (under TCJA rules): businesses must spread out (amortize) these costs over several years:

    • 5 years if the R&D work is done in the U.S.

    • 15 years if the work is done outside the U.S.

OB3 changes the rules by allowing immediate write-offs for some R&D costs again. Under OB3, businesses can fully deduct their R&D expenses right away if the work is done in the U.S. (R&D done outside the U.S. must still be spread out and deducted over 15 years). These new rules apply to R&D costs paid or incurred in tax years starting after December 31, 2024.

OB3 also adds special transition rules. If a business qualifies as an “eligible small business,” it can go back and deduct U.S. R&D expenses from 2022 and later years, as long as it files an election within one year after July 4, 2025. To qualify, the business must have had average yearly revenue of $31 million or less over the last three years.

Even if a company is not a small business, it can still choose to deduct any leftover R&D expenses from past years. These deductions can be taken all at once in 2025 or split between 2025 and 2026.

The IRS has issued new guidance (Revenue Procedure 2025-28) explaining how to make these elections.

Conclusion

OB3 introduces major tax changes starting in 2025, especially for businesses. Because of these updates, companies should talk to their tax advisors before the end of the 2025 tax year. With good planning, businesses may be able to lower their taxes significantly under OB3.

Published: 18th September 2025

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