Key Takeaways 

• The more favorable EBITDA-based business interest deduction limit is back for your 2025 tax year. (New restrictions are coming in 2026.)
   
• New R&E rules aren’t automatic. Retroactive benefits for 2022–2024 require elections, deadlines, and compliance with Rev. Proc. 2025-28.
   
• The return of 100% bonus depreciation is helpful, but not always optimal. The best first-year deduction depends on your income level and long-term tax strategy.
   
• The QBI deduction is still not a flat 20%. Wage/property limits and SSTB phase-ins continue to restrict eligibility at higher income levels.
   
• Several headline provisions have important limits, including: 100% bonus not applying to most real estate, the restored 1099-K threshold affecting only platform reporting, a temporary/phase-down SALT cap increase, and the permanent excess business loss limitation.

Eight hundred and seventy pages. That’s the size of the One Big Beautiful Bill Act that became law this summer. 

That’s a lot of reading to figure out what applies now, what applies later, and what doesn’t apply at all for your business. Not to mention the varied feelings about the bill and how it’s been presented in wildly different ways in the media. All this leaves room for misconceptions to thrive.

So today, I want to bring some clarity for your sake. Let’s debunk some OBBBA myths together.

 

OBBBA Misconception #1: OBBBA makes interest deductions more favorable right now.

OBBBA does reinstate the more favorable EBITDA-based limit (meaning depreciation and amortization will once again be included in the calculation). This change became effective for taxable years beginning after December 31, 2024. 

If your business is highly leveraged or dealing with capital-intensive equipment, this timing matters. You may need to plan for other new limitations coming in the 2026 tax year.

 

OBBBA Misconception #2: Businesses can automatically apply the new R&E expensing rules retroactively.

The ability to immediately expense domestic R&E applies only to new costs incurred in taxable years beginning after 2024 (i.e., your 2025 tax year). For R&E you’ve already capitalized in 2022–2024, the OBBBA gives you options:

• Elect a one- or two-year accelerated deduction for the unamortized balance (available to all taxpayers), or
   
• If you’re a small business taxpayer, elect to amend returns for retroactive application, but only before July 6, 2026, and only by following the procedures in Rev. Proc. 2025-28.

This is an election-by-election, taxpayer-by-taxpayer decision. And it needs to be made in harmony with cash flow projections, taxable income, and other deductions.

 

OBBBA Misconception #3: 100% bonus depreciation is always the best move for buying new equipment.

Under OBBBA, taxpayers now have three first-year deduction paths:

1. 100% bonus depreciation,
    
2. Section 179 expensing, or
    
3. Regular MACRS depreciation (available when the taxpayer elects out of bonus depreciation).

The “best” choice depends on your income picture. If 2025 is a low-profit year, taking the full deduction could generate losses you can’t currently use that only carry forward. 

In that case, a smaller first-year deduction might strategically protect future taxable income when it actually matters.

 

OBBBA Misconception #4: The QBI deduction is now a flat 20% across the board.

The QBI deduction is extended, but Specified Service Trades or Businesses (SSTBs) still face phase-outs, and the wage-and-qualified-property limitation still applies. While the OBBBA expands the income phase-in ranges for these limitations, this expansion does not start until 2026.

So while many taxpayers may see improved eligibility, plenty will still find their deduction reduced (or not available at all) once 2025 income exceeds the current, tighter limits.

So the QBI remains a planning item, not an autopilot deduction.

 

OBBBA Misconception #5: 100% bonus depreciation applies to all business real estate now.

OBBBA restores 100% bonus depreciation for tangible personal property: equipment, machinery, and similar assets.

It also introduces a special, temporary 100% bonus for Qualified Production Property (QPP), which is generally nonresidential real property used directly in manufacturing.

If you own a retail store, office building, medical suite, or warehouse that is not used in manufacturing, this special bonus depreciation does not apply to your real estate.

So, no, business real estate owners cannot suddenly expense their buildings on day one.

 

OBBBA Misconception #6: The new 1099-K threshold applies to all online sellers.

The OBBBA restores the prior reporting threshold of over $20,000 AND more than 200 transactions for third-party settlement organizations (e.g., PayPal, Venmo, Etsy).

But here’s the important nuance: This rule affects platform reporting, not income reporting requirements.

If you sell online without using a third-party payment platform, you still must report all business income regardless of whether a 1099-K is issued. The higher threshold does not change the taxability of income; it only changes the reporting mechanism.

 

OBBBA Misconception #7: All OBBBA provisions are beneficial for business owners.

One provision that’s less helpful for noncorporate business owners is that the disallowance of excess business losses is now permanent. For 2025, losses above $313,000 (single) / $626,000 (joint) cannot be deducted in the current year. They must be carried forward.

Which means that while strategies like bonus depreciation allow you to generate large paper losses to offset high personal income, the EBL rule acts as a ceiling, delaying or reducing the immediate tax benefit for your current-year cash flow. Careful planning is key, as any loss exceeding the limit is not immediately deductible but must be carried forward as a Net Operating Loss (NOL) to future years.

 

A final word

I’m sure after reading this, you can readily agree: There’s a lot of complexity buried in the fine print of the OBBBA. If you’re confused about which provisions help your business and which ones should be part of your 2026 planning, let’s hash it out together:

calendly.com/eco-tax-free-consultation/meeting

 

FAQ

“Is 100% bonus depreciation always the best tax move for my new equipment purchase?”

Not always, especially if you have a low-profit year. OBBBA gives you options (100% bonus, Section 179, or regular MACRS depreciation), and you should choose the one that keeps you from generating losses you can’t currently use, maximizing your tax savings now.

“How do I claim the immediate R&E expensing for costs I already capitalized from 2022?”

The retroactive benefit isn’t automatic; it requires a specific election on your tax return. If you’re an eligible small business taxpayer, you must file amended returns for 2022–2024 before the July 6, 2026 deadline.

“When does the more favorable EBITDA interest deduction start for my highly leveraged business?”

The favorable EBITDA rule starts with your 2025 tax year (taxable years beginning after Dec. 31, 2024). This provides immediate relief. The more restrictive new rules, like limits on capitalized interest, don’t start until 2026.

“Did the OBBBA change the QBI deduction to a flat 20% for all service businesses?”

No, the 20% rate is now permanent, but the complex limitations for Specified Service Trades or Businesses (SSTBs) still apply. While OBBBA expanded the income ranges, this expansion doesn’t start until the 2026 tax year. You must still calculate your deduction using the current, tighter limits for 2025.

“Does the new 100% bonus depreciation apply to the commercial building I just bought?“

Generally, no. 100% bonus depreciation is still for equipment and machinery. The only real estate exceptions include Qualified Improvement Property and a temporary bonus for Qualified Production Property, which applies only to nonresidential buildings used directly in manufacturing.

“Since the 1099-K threshold went up, do I need to report all my online sales income?”

Absolutely. The higher $20,000/$200 transaction rule only dictates when a third-party platform sends a form to the IRS, not your tax obligation. All business income is taxable, and you must report it regardless of whether you receive a 1099-K.