Tax Regulations & Policies to Know
The "Big Beautiful Bill", signed into law July 2025, includes some key tax provisions and changes. Here are some regulations and policies to be aware of when filing taxes for year 2025:
1. Section 179 Expensing
The maximum Section 179 deduction limit increases to $2.5 million (indexed for inflation after 2025), with the phase-out threshold starting at $4 million. This allows small and mid-sized businesses to deduct the full cost of equipment, software, and specific building improvements up to these limits.
2. 100% Bonus Depreciation
The 100% first-year bonus depreciation is permanently restored for qualified property acquired and placed in service after January 19, 2025, a reversal of the previously scheduled phase-down. This allows businesses to immediately deduct the full cost of eligible new or used machinery, equipment, and certain real property improvements.
3. Qualified Business Income Deduction
The 20% QBI deduction for eligible pass-through entities (e.g., S corporations, partnerships, sole proprietorships) has been made permanent. The income phase-in ranges have been increased, and a new minimum deduction of $400 is available for eligible active businesses.
4. Domestic R&D Expensing
Businesses can now immediately deduct qualifying domestic R&D costs in the year they are incurred, reversing the prior requirement to amortize them over five years. Retroactive relief is available, allowing small businesses to elect to apply this change to tax years beginning after 2021.
5. Business Interest Deductibility
The calculation for the business interest expense limitation (Section 163(j)) reverts to an EBITDA (earnings before interest, taxes, depreciation, and amortization) standard, which is less restrictive than the previous EBIT calculation. This change helps businesses, especially capital-intensive ones, deduct more interest expense.
6. Clean Energy Credits ending
The 30% residential clean‑energy credit for solar, heat pumps, and battery storage now ends on December 31, 2025, seven years earlier than under prior law. On the commercial side, clean‑vehicle credits for electric cargo vans and light trucks disappear for vehicles purchased after September 30, 2025.
7. Work Opportunity Tax Credit (WOTC)
The WOTC is available to employers that hire workers from targeted groups facing barriers to employment, including veterans, the previously incarcerated, and long-term recipients of family assistance or unemployment. This program is currently active, but it is scheduled to expire on December 31, 2025, unless Congress passes new legislation to extend it.
Federal Tax Deposit Rules
Effective January 1, 2011, federal taxes must be paid via Electronic Federal Tax Payment System (EFTPS®) unless you owe $2,500 or less with your quarterly Form 941. Details for enrolling in EFTPS are available at eftps.gov.
