Major Tax Changes Within the One Big Beautiful Bill

Pass-through Entity Deduction (Section 199A) Made Permanent 20% deduction on qualified business income (QBI) for sole proprietors, partnerships, S-corps and limited liability companies (LLCs). Originally set to expire 12/31/2025 under Tax Cuts and Jobs Act (TCJA)—now permanent.

Pass-Through Entity Tax (PTET) Workaround Continues

States’ “pass-through entity tax” regimes remain intact: entities pay state income tax at the business level, rather than individual owners paying at the personal level, preserving workarounds to the State and Local Tax (SALT) cap and effectively reducing the pass-through entity's income.

Qualified Small Business Stock (QSBS) Enhanced (Section 1202) provides and exclusion from gain upon the sale of QSBS, depending on the date of purchase. It continues the tiered exclusion on gain:

50% if held ≥ 3 years
75% if held ≥ 4 years
100% if held ≥ 5 years
Exclusion cap increases from $10 M to $15 M (inflation-adjusted).

Expensing & Depreciation

100% bonus depreciation (Section 168(k)) — now permanent for qualified property, allowing businesses to immediately deduct those costs rather than writing the off over their "useful life."
Section 179 allows a expensing limit increased to $2.5 M, indexed for inflation (phase-out begins at $4 M).

Research & Development (R&E) Expensing of Qualifying Costs

Full, immediate expensing of domestic R&D costs—no more mandatory five-year amortization.

Employee Retention Credit (ERC) Reforms for wages paid during COVID-19

No refunds on ERC claims filed after January 31, 2024.
New penalties for promoters of fraudulent ERC claims.
IRS statute of limitations extended to six years for ERC adjustments.

Foreign Income & Anti-Abuse Provisions for Overseas Profits

The global intangible low-taxed income or GILTI deduction (Section 250) set at 40%; foreign tax credit reduction at 10%—made permanent.
The foreign-derived intangible income (FDII) deduction is reduced to 33⅓% %, aligning its effective rate with GILTI. QBAI removed from GILTI/FDII calculations.
The Base Erosion and Anti-Abuse Tax (BEAT) rate was permanently raised from 10% to 10.5%.