(Disclaimer: These are things you want to be discussing with your tax professional more in-depth, so you’re making a plan that’s right for your business.)
Key Takeaways
- The more favorable EBITDA-based business interest deduction limit is back for your 2025 financial forecasts, potentially improving reported profitability. (New restrictions are coming in 2026.)
- New R&E expensing isn’t automatic. Documenting past costs is crucial. Retroactive relief for 2022-2024 requires a specific action and has a July 6, 2026, deadline for filing amended returns.
- The return of 100% bonus depreciation is helpful, but not always optimal. The best first-year deduction depends on your current-year profitability and cash flow goals.
- The QBI deduction is still not a flat 20%. Accurate tracking of payroll and business income is essential because phase-ins continue to restrict eligibility.
- 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 Auburn 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: Past R&E spending automatically turns into cash.
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, or
- If you’re a small business taxpayer, elect to amend returns for retroactive application, but only before July 6, 2026, and only by specific IRS procedures.
This decision will depend on your current cash flow and should definitely be made in consultation with your Roseville CPA. And to position yourself well, I recommend creating a dedicated R&E file listing all capitalized R&E costs from 2022–2024, tagging these costs clearly in your accounting system, and setting internal deadline reminders well ahead of mid-2026.
OBBBA Misconception #2: 100% bonus depreciation is always the best move for buying new equipment.
Under OBBBA, you now have three paths:
- 100% bonus depreciation,
- Section 179 expensing, or
- Regular MACRS depreciation (available when you elect out of bonus depreciation).
The “best” choice depends on your profit projections. If 2025 is a low-profit year, taking the full deduction creates a large paper loss that provides no immediate cash flow benefit.
So be sure to run multiple scenarios for planned equipment purchases before committing to compare whether immediate write-off, partial write-off, or slower depreciation is better for your bottom line.
OBBBA Misconception #3: 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.
And the trap here for you is that assuming a full deduction leads to inflated profit projections and overly optimistic cash planning.
So the QBI remains a planning item, not an autopilot deduction.
OBBBA Misconception #4: No 1099-K means no income to report.
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 only affects when a third-party platform sends a form to the IRS, not your internal income tracking.
If you sell online without using a third-party payment platform, all business income must be recorded and reconciled on your books, regardless of whether you receive a 1099-K. The higher threshold does not change the taxability of income; it only changes the reporting mechanism.
OBBBA Misconception #5: 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.
Which makes careful tracking key: any excess loss must be correctly separated on your books and 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 Roseville business and which ones should be part of your 2026 planning, let’s hash it out together:
5staraccountingandbusiness.com/schedule/
FAQ
“Is 100% bonus depreciation always the best move for my new equipment purchase?”
Not always, especially if you project a low-profit year. We should review your profit forecasts together, as the best option is the one that avoids generating paper losses with no immediate cash flow benefit.
“What documentation do I need to prepare for my CPA to get the R&E retroactive relief?”
The retroactive benefit isn’t automatic. Your immediate step is to document and separate all R&E costs capitalized from 2022-2024 so your CPA can make the required election 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.
“Does the higher 1099-K threshold change how I track online sales in my bookkeeping?”
No. The higher rule only dictates when a platform sends a form. You must still meticulously record and reconcile ALL business income on your books, as all income is taxable.