New Tax Law: OBBB
- Mark S Gleason CPA
- Jul 5
- 2 min read
Here's a summary of the new provisions in the One Big Beautiful Bill (OBBB) that will affect small business entities including S corporations, partnerships, and individual business owners. Most provisions apply to tax years beginning after December 31, 2025, i.e., starting with 2026 tax returns.
These provisions collectively reinforce real estate as a tax-advantaged asset class, especially for high-net-worth individuals and passthrough entities.
Depreciation & Cost Recovery
100% Bonus Depreciation Restored Permanently:
Applies to qualified property acquired and placed in service after Jan. 19, 2025.
Includes tangible personal property and qualified improvement property (QIP).
New Expensing for Production Property:
Businesses can fully expense new factories and improvements used in qualified production activities (e.g., manufacturing, agriculture).
Applies to construction started after Dec. 31, 2024 and placed in service before Jan. 1, 2034.
State and Local Tax (SALT) Deduction
Temporary SALT cap increase:
Raised from $10,000 to $40,000 for 2026 (adjusted for inflation to $40,400).
Applies to itemizing taxpayers, including passthrough owners.
Phase-down for high earners:
Begins at $500,000 MAGI (adjusted annually), reducing the deduction by 30% of the excess.
Cannot fall below $10,000.
PTET workaround limited: Specified service trades or businesses (SSTBs) can no longer use pass-through entity tax (PTET) payments to bypass the SALT cap.
New tax deductions for individuals
New deduction for overtime and tips:
Up to $12,500 of overtime and $25,000 of tips can be deducted from income (phased out above $150,000 AGI).
Auto loan interest deduction:
Up to $10,000 deductible for U.S.-assembled vehicles (expires after 2028).
Net Operating Loss Carrybacks:
Two-Year Carryback Reinstated:
The bill restores a 2-year carryback for NOLs incurred by noncorporate taxpayers, including passthrough entities like S corporations and partnerships.
This reverses the current rule (post-TCJA) that generally disallows carrybacks for most taxpayers.
The permanent QOZ reboot and 1031 preservation offer long-term planning certainty, while the LIHTC expansion may create new syndication opportunities.
Mark Gleason CPA
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