One Big Beautiful Bill Act: New Tax Deductions CPA Firms & Businesses Must Act On in 2026

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, as Public Law 119-21, has been reshaping the US tax code for nearly nine months. As we move through April 2026, the most important question is no longer what the law says. It is whether your clients are fully capturing every deduction available to them right now.

For CPA firms and business owners, the OBBBA’s deductions and compliance changes are not on the horizon; they are active right now. Bonus depreciation is back at 100% and now permanent. Section 179 limits have jumped to $2.56 million for 2026, with the phase-out threshold at $4.09 million. R&D expenses are fully restored. Tip and overtime deductions are already being claimed on 2025 returns this filing season. And the SALT cap for 2026 has reached $40,400.

At Countsure, we work with CPA firms and US businesses every day to translate tax law changes into real, actionable strategies. This guide breaks down every major OBBBA deduction, who it applies to, and what CPA firms need to act on while the 2026 tax year is still running.

Key Takeaways

• The OBBBA has been active law since July 4, 2025, with most provisions now in full effect for the 2026 tax year.
• Section 179 expensing now allows up to $2.56 million in first-year equipment deductions for 2026, with the phase-out starting at $4.09 million (per IRS Rev. Proc. 2025-32).
• 100% bonus depreciation is now permanent for property acquired and placed in service after January 19, 2025, restoring immediate write-off for qualifying capital investments.
• The Section 199A (QBI) 20% deduction is now permanent, giving pass-through business owners long-term planning certainty.
• R&D costs can again be expensed immediately, retroactive to 2022 for eligible small businesses; amended returns may unlock refunds.
• Workers in tip-based jobs can deduct up to $25,000 in qualified tips (2025-2028), a deduction already claimable on 2025 returns being filed this April.
• The SALT deduction cap rises to $40,400 in 2026, a significant benefit for high-tax-state clients.
• CPA firms must prioritize documentation protocols and update compliance checklists, as several deductions require specific IRS-defined records.

What Is the One Big Beautiful Bill Act?

The One Big Beautiful Bill Act is a comprehensive reconciliation bill that makes permanent many of the tax provisions introduced under the 2017 TCJA, which were originally set to expire at the end of 2025. Without the OBBBA, most individual and business tax rates would have reverted to significantly higher pre-TCJA levels in 2026, a cliff the law successfully prevented.

Beyond simply extending existing provisions, the OBBBA introduces several brand-new deductions and credits, including new write-offs for tips, overtime pay, auto loan interest, and a dramatically expanded employer childcare tax credit.

For CPA firms, the critical takeaway heading into mid-2026 is this: the planning window is open, but for several provisions, it will not stay that way. While major business provisions like Section 199A, bonus depreciation, and Section 179 are now permanent, the new individual deductions for tips, overtime, auto loan interest, and the senior deduction expire after 2028, and the expanded SALT cap reverts to $10,000 in 2030. Clients who act strategically now will capture benefits that simply will not be available in a few years.

What Are the Biggest Business Tax Deduction Changes in 2026?

Section 179 Expensing: New Limit of $2.5 Million

One of the most immediately impactful changes for SMBs and mid-sized companies is the increase in the Section 179 expense limit. Under the OBBBA, businesses can now deduct up to $2.56 million in qualifying equipment, machinery, and software in the year of purchase for 2026, more than double the pre-OBBBA inflation-adjusted limit of $1.25 million.

The phase-out begins once total qualifying property placed in service exceeds $4.09 million for 2026, compared to the pre-OBBBA threshold of $3.13 million. These figures are published in IRS Revenue Procedure 2025-32 and will continue to be adjusted annually for inflation.

Practical scenario: A manufacturing company that spends $2.2 million on new production equipment in 2026 can now deduct the entire amount in year one, rather than depreciating it over five to seven years. That is a direct, same-year cash flow improvement of potentially hundreds of thousands of dollars.

100% Bonus Depreciation Extended Through 2030

After a phased reduction that brought bonus depreciation down to 60% in 2024 and 40% in 2025 with a full elimination scheduled for 2027 the OBBBA permanently restores 100% bonus depreciation for property acquired and placed in service after January 19, 2025.

This applies to qualified property including machinery, technology, vehicles (with limits), and certain building improvements. For capital-intensive businesses (manufacturing, construction, logistics, healthcare), this is one of the most valuable provisions in the entire bill.

CPA firms should proactively review client capital expenditure plans for 2026 and model the depreciation impact before year-end purchasing decisions are made.

Section 199A (QBI Deduction) Made Permanent

The 20% Qualified Business Income (QBI) deduction, one of the most valuable provisions for pass-through entity owners, is now permanently enshrined in the tax code. Previously, this deduction was scheduled to expire at the end of 2025, creating enormous uncertainty for S-Corp owners, LLC members, sole proprietors, and partnership stakeholders.

With the deduction now permanent, business owners can structure their compensation, distributions, and entity type with long-term confidence. The OBBBA also introduces an inflation-adjusted minimum deduction of $400 for taxpayers with at least $1,000 of QBI from active trades or businesses in which they materially participate.

R&D Costs: Immediate Write-Off Restored

One of the most consequential reversals in the OBBBA is the restoration of immediate expensing for domestic Research & Development (R&D) costs. Since 2022, the TCJA had required businesses to amortize R&D expenses over five years (15 years for foreign R&D), rather than deducting them in the year they were incurred.

The OBBBA reverses this requirement through new Code Section 174A, allowing businesses to again expense domestic R&D costs in the year incurred for tax years beginning after December 31, 2024. Foreign R&E expenses remain subject to 15-year amortization under existing Section 174.

For tech companies, biotech startups, product developers, and engineering firms, this is a significant cash flow recovery opportunity, and CPA firms should flag it for every applicable client immediately. April 2026 is an ideal time to initiate these amended filings while 2025 returns are actively in process.

Key Business Tax Deduction Changes: Before vs. After OBBBA

Provision	Pre-OBBBA (2025 Expiring Law)	Post-OBBBA (2026 Onwards)
Section 179 Deduction Limit	$1.25 million	$2.56 million
Section 179 Phase-Out Threshold	$3.13 million	$4.09 million
Bonus Depreciation	Phased down to 40% in 2025; scheduled 0% in 2027	100% through permanent
Section 199A QBI Deduction	Expiring end of 2025	Permanent
Domestic R&D Expensing	5-year amortization required	Immediate write-off restored
Employer Childcare Tax Credit	Max $150,000	Max $500,000 ($600K for small size)
1099 Reporting Threshold	$600	$2,000 (indexed for inflation)
Paid Family & Medical Leave Credit	Temporary	Permanent

What New Tax Deductions Must CPA Firms Communicate to Clients?

No Tax on Tips: Up to $25,000 Deduction

For clients in food service, hospitality, beauty, and other service industries, the OBBBA creates a new above-the-line deduction for qualified tips of up to $25,000 per year (2025-2028). The deduction applies to both employees and self-employed individuals in occupations the IRS identified as customarily and regularly receiving tips on or before December 31, 2024. The IRS published the final regulations in April 2026 listing more than 70 qualifying occupations under the Treasury Tipped Occupation Code (TTOC) system.

The deduction phases out for individuals with modified AGI above $150,000 ($300,000 for married filing jointly). Tips must be reported on a Form W-2, Form 1099, or equivalent statement.

For CPA firms: This deduction requires accurate tip-tracking records from employer clients. Update your bookkeeping and payroll workflows accordingly. If any of your clients had employees in qualifying tip-based roles during 2025, confirm the deduction is correctly applied on their 2025 tax returns, which are currently in process.

No Tax on Overtime: Up to $12,500 Per Worker

A parallel deduction applies to qualified overtime compensation of up to $12,500 per taxpayer ($25,000 for married filing jointly) for overtime earned in 2025 through 2028. The income phase-out mirrors the tips of deduction.

This is primarily a worker-facing benefit, but it has downstream implications for employers: wage documentation, W-2 accuracy, and payroll systems all need to reflect the distinction between regular wages and qualified overtime. For clients with hourly workforces, verify the 2025 overtime deduction is captured correctly on returns being filed this season.

SALT Cap Rises to $40,400 in 2026

The State and Local Tax (SALT) deduction cap, one of the most hotly debated TCJA provisions, sees a significant increase under the OBBBA. The cap rises to $40,000 in 2025 ($20,000 for married filing separately) and $40,400 in 2026 ($20,200 MFS), increasing by 1% annually through 2029 before reverting to $10,000 ($5,000 MFS) in 2030.

The phase-out applies to taxpayers with modified AGI above $500,000 in 2025 ($505,000 in 2026, indexed 1% annually). The cap is reduced by 30% of MAGI in excess of the threshold but cannot fall below the original $10,000 TCJA floor. As a result, the expanded cap effectively phases back down to $10,000 once MAGI reaches roughly $600,000 in 2025 (around $606,000 in 2026). For clients in high-tax states like California, New York, New Jersey, and Illinois, this is a major planning opportunity particularly for business owners who itemize. Importantly, OBBBA preserved the Pass-Through Entity Tax (PTET) workaround used in 36 jurisdictions, allowing pass-through entity owners to convert otherwise-capped state income taxes into federally deductible business expenses. CPA firms should review PTET elections for every applicable client in 2026, particularly in states where PTET regimes are scheduled to sunset (Illinois, Oregon, Utah, Virginia).

New Car Loan Interest Deduction: Up to $10,000

The OBBBA introduces a temporary deduction of up to $10,000 per year for interest paid on loans used to purchase qualifying new vehicles for personal use, available for tax years 2025 through 2028. To qualify, the vehicle must be new (not used), have its final assembly in the United States, have a gross vehicle weight rating under 14,000 pounds, and be a car, minivan, van, SUV, pickup truck, or motorcycle. The loan must be originated after December 31, 2024, and secured by the vehicle. Leased vehicles and used vehicles do not qualify.

This is available even for non-itemizers as an above-the-line deduction, making it broadly accessible. For business owners and employees who recently purchased qualifying vehicles, this is a deduction worth capturing immediately.

Employer Childcare Tax Credit Quadrupled

One of the most significant employer-facing incentives in the OBBBA is the dramatic expansion of the Employer-Provided Childcare Tax Credit under IRC Section 45F, effective for tax years beginning after December 31, 2025. The maximum annual credit rises from $150,000 to $500,000, and for eligible small businesses (those with average annual gross receipts of $31 million or less), it climbs to $600,000.

For CPA firms advising mid-sized clients or family-owned businesses that offer or plan to offer childcare benefits, this is a high-priority planning item. The credit directly reduces tax liability dollar-for-dollar.

Individual and Employer Deduction Highlights, 2026

Deduction / Credit	Who It Applies To	2026 Amount	Duration
No Tax on Tips	Service workers (employees & self-employed)	Up to $25,000/year	2025-2028
No Tax on Overtime	Workers receiving FLSA-required overtime	Up to $12,500 ($25K joint)/year	2025-2028
SALT Deduction Cap	Itemizers	$40,400 (2026); 1%/yr increase through 2029; phase-out begins at $505K MAGI in 2026	2025-2029; reverts to $10,000 in 2030
New Car Loan Interest	Individuals buying new US-assembled vehicles for personal use only	Up to $10,000/year; phase-out at $100K MAGI single / $200K joint	Through 2028
Employer Childcare Credit	Employers offering childcare benefits	40% of expenses up to $500,000 (50% up to $600K for small biz with ≤$31M gross receipts)	2026 onwards
Standard Deduction	All non-itemizers	$32,200 (MFJ) / $24,150 (HOH) / $16,100 (single)	Permanent
Estate & Gift Exemption	High-net-worth individuals	$15M per person / $30M joint	Permanent
Charitable Deduction (non-item.)	Non-itemizers making cash gifts	$1,000 ($2,000 joint)	2026 onwards
Senior Deduction	Taxpayers 65+	$6,000 ($12,000 joint)	2025-2028

What Are the Compliance and Documentation Requirements?

1099 Reporting Threshold Raised to $2,000

The OBBBA raises the reporting threshold for Form 1099-NEC and Form 1099-MISC from $600 to $2,000, effective for payments made in tax year 2026 (1099s issued in early 2027). The threshold begins inflation indexing in 2027. Importantly, for 1099s currently being issued for tax year 2025, the old $600 threshold still applies there is no retroactive relief.

CPA firms should update their year-end reporting checklists and communicate the new threshold clearly to clients who manage vendor payments.

What Records Must Businesses Keep for OBBBA Deductions?

Documentation is not optional; it is the difference between a deduction that survives an IRS audit and one that does not. For the OBBBA’s new deductions, here are the critical records:

• Tips deduction: Tip records per IRS-defined occupation list, W-2 or 1099 confirmation
  
• Overtime deduction: Payroll records distinguishing regular vs. overtime wages
  
• R&D write-off: Documentation of qualifying domestic R&D expenses and activity logs
  
• Section 179 / Bonus depreciation: Purchase invoices, placed-in-service dates, asset descriptions
  
• Car loan interest: Loan origination documents, vehicle VIN, US assembly confirmation
  
• Employer childcare credit: Proof of qualifying expenditures and program structure
  

How Should CPA Firms Restructure Tax Planning for 2026?

The OBBBA is not a passive law; it rewards CPA firms that actively engage with its provisions. Here is a practical strategic framework for 2026:

1. Segment your client base by applicable deductions. Not every client benefits equally. Manufacturing and capital-intensive clients need bonus depreciation and Section 179 analysis. Service-industry clients with hourly workforces need both tip documentation protocols (with TTOC occupation verification) and FLSA overtime premium tracking. Tech, biotech, and engineering clients need retroactive R&D reviews under Section 174A. High-net-worth and high-tax-state clients need SALT cap modeling and PTET election review. Segment your portfolio first, then prioritize.
   
2. Run QBI projections for every pass-through entity client. With the Section 199A deduction now permanent, clients should be making entity structure decisions with long-term confidence. Review compensation-to-distribution ratios, W-2 wage limits, and qualified property thresholds.
   
3. Model bonus depreciation vs. Section 179 for capital-heavy clients. These two provisions work differently and have different rules. For 2026, Section 179 caps at $2.56 million with phase-out beginning at $4.09 million; bonus depreciation has no cap. For clients with capital expenditures above $2.56 million, bonus depreciation captures what Section 179 cannot.
   
4. Flag R&D clients for amended return review. For any client that amortized domestic R&D costs between 2022 and 2025 under the five-year rule, the OBBBA’s retroactive provision may generate a refund. With 2025 returns currently in process, April 2026 is the right time to identify these clients and initiate amended filings promptly.
   
5. Update all engagement letters and compliance checklists. The OBBBA introduces enough new documentation requirements that any CPA firm operating with 2024-era checklists is already behind. Audit your workflows now.
   

How Does Outsourcing Help CPA Firms Navigate OBBBA Changes?

The OBBBA creates more work, not less. Amended returns, new documentation protocols, client education, depreciation modeling, tip deduction compliance, and childcare credit analysis; each of these takes time that most CPA firms simply do not have in-house during peak season.

Offshore staffing for CPA firms (particularly tax preparation support, bookkeeping, and compliance review) is one of the most practical ways to absorb the additional workload that major tax law changes create. When routine tasks are handled offshore by qualified accounting professionals, your senior staff can focus on the high-judgment advisory work that clients are increasingly demanding.

This is particularly true for smaller and mid-sized CPA firms that do not have the capacity to hire full-time staff for every spike in workload. A scalable offshore team lets you respond to the OBBBA’s demands without the cost and commitment of permanent hires.

Conclusion

The One Big Beautiful Bill Act is a genuine opportunity for businesses and CPA firms that move quickly. From 100% bonus depreciation and expanded Section 179 limits to the permanent QBI deduction and restored R&D write-offs, the 2026 tax year is packed with deductions that can meaningfully improve cash flow, provided they are claimed correctly and supported by proper documentation.

The challenge is capacity. The volume of analysis, compliance work, and client communication required to fully capitalize on the OBBBA is significant. That is where Countsure comes in.

We work alongside CPA firms and finance teams as an extension of their practice, handling tax preparation support, bookkeeping, compliance review, and offshore staffing so that your team has the bandwidth to deliver the strategic guidance your clients need right now.

Frequently Asked Questions (FAQ)

1. When did the One Big Beautiful Bill Act take effect?

The OBBBA was signed into law on July 4, 2025, as Public Law 119-21. Most major business and individual provisions are in effect for both the 2025 tax year (currently being filed) and the 2026 tax year going forward. Provisions including the tip deduction, overtime deduction, auto loan interest deduction, senior deduction, increased Section 179 limits, restored bonus depreciation, and Section 174A R&D expensing all apply to 2025 returns.

2. Is the Section 199A (QBI) 20% deduction permanent?

Yes. The OBBBA makes the Section 199A deduction permanent, removing the uncertainty that had previously complicated long-term tax planning for pass-through entity owners including S-Corp shareholders, LLC members, partners in partnerships, and sole proprietors. The OBBBA also added a new $400 minimum deduction (for taxpayers with at least $1,000 of QBI from active trades or businesses) and expanded the phase-in ranges to $75,000 (single) and $150,000 (joint).

3. What is the new Section 179 deduction limit for 2026?

The OBBBA raises the Section 179 first-year expensing limit to $2.56 million, with the phase-out beginning at $4.09 million in qualifying property placed in service during the year. This is a significant increase from the prior $1.16 million limit.

4. How does the R&D retroactive expense provision work?

The OBBBA restores immediate expensing of domestic R&D costs for tax years beginning after December 31, 2024. Eligible small businesses may also elect to apply the provision retroactively to 2022, potentially generating tax refunds through amended returns. Consult a qualified CPA to assess eligibility.

5. Who qualifies for the no-tax-on-tips deduction?

The deduction applies to employees and self-employed individuals working in occupations that the IRS identified as customarily and regularly receiving tips on or before December 31, 2024 (the Treasury Tipped Occupation Code or TTOC list, which covers more than 70 occupations). The maximum deduction is $25,000 per year, available for tax years 2025 through 2028. The deduction phases out at $100 for every $1,000 of modified AGI above $150,000 ($300,000 for married filing jointly).

6. What is the new SALT deduction cap for 2026?

For 2026, the SALT cap rises to $40,400 ($20,200 for married filing separately), up from $40,000 in 2025. The cap increases by 1% annually through 2029 before reverting to $10,000 in 2030. For 2026, the phase-out begins at modified AGI of $505,000 (the threshold also indexes by 1% annually).

7. How does the employer childcare tax credit change under the OBBBA?

The maximum employer-provided childcare tax credit increases from $150,000 to $500,000 per year. Eligible small businesses qualify for an even higher ceiling of $600,000. This credit directly reduces federal tax liability and applies to qualified childcare facility expenditures and resource/referral program costs.

8. Should CPA firms outsource to handle increased OBBBA workload?

Many CPA firms are turning offshore staffing and outsourced accounting support to manage the additional compliance and preparation of workload created by major tax law changes like the OBBBA. Scalable offshore teams allow firms to absorb demand spikes without the cost of permanent hires, keeping senior staff focused on high-value advisory work.

Read More:

• Why CPA Firms Are Outsourcing Bookkeeping & Tax Preparation in 2026
• Outsourced Tax Preparation Cost, Process & Benefits for CPA Firms
• Secure Tax Season Outsourcing: A Strategic Guide for CPA Firm Capacity & Compliance