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One Big Beautiful Bill Act: What Are the Impacts for Business Owners?
The OBBBA has permanently extended many of the temporary provisions previously enacted in the 2017 Tax Cuts and Jobs Act (TCJA) and has restored business tax incentives and introduced new provisions designed to stimulate economic activity.
Several provisions included in the OBBBA have potentially significant implications for business owners. The impacts of these provisions are tied to the business’s structure and the owner’s intentions regarding selling the company or gifting interest to family members.
Increases in the lifetime exclusion amount
The OBBBA permanently increases the amount of wealth that business owners can transfer to the next generation without incurring gift or estate taxes. In 2025, individuals can transfer up to $13.99 million ($27.98 million for married couples) without incurring gift or estate taxes. Effective January 1, 2026, the exclusion amount increases to $15 million ($30 million for married couples), adjusted annually for inflation beginning in 2027.
Gifting a minority interest or non-voting shares in illiquid assets can be especially attractive if those interests are eligible for valuation discounts.
More benefits from qualified small business stock (QSBS)
OBBBA’s improvements to the QSBS provisions could result in millions of dollars in tax savings for some business owners.
Before OBBBA, someone owning QSBS for five years could exclude up to the greater of $10 million or 10 times their cost basis from capital gains taxes. The OBBBA increases the exclusion to the greater of $15 million or 10 times the cost basis for QSBS issued after the OBBBA’s enactment date (July 4, 2025). Shareholders who don’t meet the five-year threshold may still get a partial benefit. Also, larger companies are now eligible: The OBBBA increased the corporate gross asset test threshold used to determine whether a company is qualified to issue QSBS, from $50 million to $75 million.
100% bonus depreciation
The OBBBA permanently restores 100% bonus depreciation for qualified property acquired and placed in service on or after January 20, 2025. Previously, the TCJA allowed for 100% bonus depreciation from 2017 to 2022 and dropped by 20% each year starting in 2023. The OBBBA goes further than simply restoring 100% bonus depreciation: It allows a 100% bonus depreciation allowance for qualified production property, which is a portion of nonresidential real estate used in qualified production activities.
Domestic research and development (R&D) expense
Under the TCJA, starting in 2022, domestic R&D expenses had to be capitalized and amortized over five years. The OBBBA allows business owners to immediately deduct 100% of their expenditure, beginning January 1, 2025. In some circumstances, this applies retroactively. Business owners who capitalized R&D expenses between 2022 and 2024 can fully deduct the unamortized amount in 2025 or pro rata in 2025 and 2026.
Your Ingalls team in conjunction with your tax advisors can help you understand your options. We look forward to working with you to achieve the maximum benefit from these tax opportunities.
The material is not to be reproduced or distributed to others without Ingalls & Snyder, LLC’s (“Ingalls” or the “Firm”) express written consent. This material is being provided for informational purposes and any opinions expressed in this material are only opinions at the time of writing. Nothing provided by Ingalls should be considered tax or legal advice, and clients should seek advice from their tax and legal professionals. Bridgehampton is a team at Ingalls & Snyder, LLC, an investment advisor registered with the Securities & Exchange Commission and a FINRA member broker dealer. More information including the firm’s Form ADV Brochure and Form CRS can be found at https://www.ingalls.net/importantinformation.
Ingalls & Snyder is a registered investment advisor and broker-dealer based in New York City. We provide investment management and related services to private clients and institutional investors.
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