The recent tax bill has dominated the news, with a few major changes capturing most of the attention. Provisions like the return to 100% bonus depreciation for business property and the extension of the Qualified Business Income (QBI) deduction have been widely discussed for their broad impact on business investment and pass-through entities.
Perhaps the most significant headline was the change to how businesses can deduct Research & Development expenses. Since 2022, companies have been forced to spread these costs out over five years, a rule that hit cash flow hard for innovative businesses. The new law reverses this for domestic operations, once again allowing for immediate, full deduction of U.S.-based R&D expenses.
But beyond these big-ticket items, several less-discussed provisions could have a significant impact on your business’s finances and strategy. Here’s a rundown of the other changes you might have missed.
Investment & Development Incentives
Opportunity Zones
This program, designed to spur investment in economically distressed areas, has been permanently renewed and enhanced. It remains a key tool for real estate investors and others looking to defer or reduce capital gains taxes.
New Markets Tax Credit (NMTC)
The bill also permanently extends the NMTC, a valuable credit for those investing in community-focused businesses and projects.
Special Depreciation for Production Property
This provision creates a special 100% first-year depreciation allowance for qualifying nonresidential real property used in manufacturing, production, or refining.
Exception for Residential Construction Contracts
The new law expands an exception to the percentage-of-completion accounting method for certain residential construction contracts, not just home construction contracts.
Changes to Deductions
Business Interest Limitation
The rules limiting how much business interest you can deduct have been modified. The calculation will now permanently be based on earnings before interest and taxes (EBIT), a change that makes the limitation more restrictive for some businesses.
Business Meals Deduction
The law creates new exceptions to the limitations on deducting business meals, including for meals provided on certain fishing boats and at some fish processing facilities.
State and Local Tax (SALT) Deduction Cap
The bill adjusts the limitation on deducting state and local taxes. The cap is increased to $40,000 for 2025 and will be adjusted for inflation through 2029 before reverting to $10,000. The benefit is phased out for higher-income taxpayers.
Employee-Focused Tax Changes
Paid Family and Medical Leave Credit
The tax credit for offering paid family and medical leave has been made permanent and enhanced.
A New Deduction for Tip Income
The new law creates a tax deduction for qualified tip income. While this does not make tips tax-free, it allows individuals in customarily tipped occupations to deduct up to $25,000 in cash tips annually, subject to income limitations. This provides a direct tax benefit without changing an employer’s responsibility for tracking and reporting.
A New Deduction for Overtime Pay
Similar to the provision for tips, the bill establishes a new tax deduction for qualified overtime compensation. This allows employees to deduct overtime pay, subject to annual limits and income phase-outs. It is a personal benefit for workers and does not alter the business’s tax strategy.
New Programs
“Trump Accounts” Pilot Program
A new pilot program for “Trump Accounts” has been established. These are new individual retirement accounts for minors, funded by a combination of public and private contributions, designed to encourage youth savings.
This tax bill is one of the most significant pieces of legislation for businesses in years, and its complexity goes far beyond the headlines. While major provisions offer clear opportunities for planning around equipment purchases and R&D investment, the nuances found in smaller changes—from tax credit enhancements to adjustments in how deductions are calculated—will have a real financial impact. Navigating these updates requires a proactive approach. A thorough review of your business structure, compensation policies, and investment plans is essential to fully leverage the benefits and mitigate any new risks.