Tax News for Businesses

The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, establishes a long list of tax changes that will affect business reporting and tax deductions. 

There are standard provisions across industries that could affect businesses, with the first two taking effect for the 2025 tax year and the remainder beginning on January 1, 2026. The OBBBA will also implement minor changes in the real estate, agriculture, manufacturing, media production, mining and drilling sectors. If you do not see something mentioned here and have a question, please feel free to contact us.

(2025 tax year) Bonus Deductions: OBBBA permanently reinstates 100% bonus depreciation, which had been previously reduced under the 2017 Tax Cuts and Jobs Act (TCJA). This applies to property acquired after January 19, 2025.

(2025 tax year) Research and Experimental Expenditures (R&D): The Act permanently reinstates the immediate expensing of domestic research and experimental expenditures while allowing an election to amortize certain expenses. Any amount paid or incurred in connection with software development is treated as a research and development (R&D) expense.

W-2 Reporting: Revisions to the W-2 reporting forms will take effect in the 2026 tax year due to new deductions introduced in the new bill. New codes have been added to report qualified tips and overtime compensation deductions. With the start of a new year, payroll systems should be reviewed to ensure that tips and overtime are tracked appropriately. These deductions are only effective through 2028.

Qualified Business Income Deduction (QBI): Beginning with the 2026 tax year, the act permanently extends the 20% deduction for qualified business income (QBI) and broadens the phase-in income limitations. It also introduces an inflation-adjusted minimum deduction of $400 for taxpayers who have at least $1,000 of qualifying income from active trades or businesses.

Meals Deductions: In the 2026 tax year, the new bill introduces changes in this category.  Employee meals, snacks, and beverages provided by employers without client or business purpose will no longer be deductible.  An exception has also been added for establishments that sell food and beverages to customers and provide meals for their employees (such as restaurants). These expenses, which were previously disallowed, will now be deductible.

1099s: Beginning in 2026, there will be changes to the 1099 NEC and MISC forms. The reporting requirements will increase, resulting in fewer form filings. The threshold for issuing these forms will increase from $600 to $2,000, and beginning in 2027, this amount will be adjusted for inflation.  For those filing 1099-Ks (third-party payments), the previous $600 threshold requirement will revert to the earlier requirement of more than $20,000 in total payments and more than 200 transactions. 

Employer Provided Childcare Credit: The OBBBA increases the employer-provided childcare credit from 25% to 40% (and 50% for eligible small businesses) and increases the yearly cap from $150,000 to $500,000 ($600,000 for eligible small businesses), with both amounts indexed for inflation.

Paid Family Medical Leave Credit:  The new act makes the employer credit for wages paid to qualifying employees on family medical leave (FML) permanent. Previously, the allowable amount was between 12.5% and 25% of wages. Now employers will also be allowed to elect a credit amount of either the percentage of wages paid, or the percentage of premiums paid or incurred for FML insurance.

If you have any questions about these new provisions or any others that may impact your business, please contact our office at accounting@hvandpartners.com or 914-617-7620, and we will direct your call to better assist you.