A Practical Guide To The New Business Tax Bill And What It Means For Your 2025 Plan

Big Beautiful Bill – Business Edition – Tax Senior Bryce Thompson 

New tax rules rarely hand business owners this much control over cash flow, but the latest bill does exactly that. We sit down with Bryce Thompson, Tax Senior at MP CPAs, to break down what actually changes your bottom line: the return of 100% bonus depreciation for most non-residential assets, a bigger Section 179 limit, immediate expensing for qualified production property in U.S. manufacturing, and the shift back to EBITDA for Section 163(j) interest limits. Bryce explains how these provisions can accelerate deductions, improve financing capacity, and help you reinvest sooner.

We dig into practical strategy, not buzzwords. You’ll hear how to time capital purchases around income, why state conformity can erode a clean federal win, and when it makes sense to push placed-in-service dates into 2025. For innovators, domestic R&D becomes fully deductible starting in 2025, with a powerful retroactive election for small businesses to reclaim previously capitalized costs. We map the deadlines, tradeoffs, and modeling steps to capture the most value without tripping over multi-year consequences.

Founders planning exits will want to note tighter QSBS timelines and higher caps: a reduced holding period with tiered exclusions, an increased per-issuer cap to 15 million, and a larger asset threshold that broadens eligibility. Put together, these changes reward smart sequencing—aligning purchases, financing, and equity plans to your revenue curve. If you’re building, modernizing, or preparing to sell, this is a timely playbook to turn tax law into leverage. If this helped clarify your next move, follow the show, share it with a colleague, and leave a quick review so others can find it.

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Transcript

Welcome And Episode Setup

SPEAKER_00 0:01

Welcome to the Knowing What Counts Podcast, the place where expert guidance makes smart financial decisions. Whether you're a high net worth individual or a thriving business, the experts at MPCPAs are here to help you protect and optimize your wealth. Let's get started. Because success begins with knowing what counts.

SPEAKER_01 0:25

When it comes to business taxes, timing and strategy make all the difference.

Meet Bryce And His Focus

SPEAKER_01 0:31

Bryce Thompson breaks down how to turn your tax bill into a planning tool. Welcome back, everyone. I'm Sophia Yvette, co-host and producer, back in the studio with Bryce Thompson, Tax Senior at MPCPAs. Bryce, how's it going today?

SPEAKER_02 0:46

I'm doing well, Sophia. Thanks for asking.

SPEAKER_01 0:49

Awesome. Well, let's jump in, Bryce. Before we get started, why don't you introduce yourself to the audience?

SPEAKER_02 0:57

So my name is Bryce Thompson. I'm a senior tax associate here at MP. I've been with the firm since 2021 when I started as an intern while attending Western New England University in Springfield. I focus primarily on tax prep, advisory, and planning for high-net worth individuals as well as businesses, including small local businesses and larger corporations across many different industries.

Bonus Depreciation Returns To 100%

SPEAKER_01 1:26

So, Bryce, one of the big concerns in the tax law before the Big Beautiful bill was passed was the impact of depreciation deductions, most notably the phase-out of accelerated bonus depreciation. How did the new bill address this concern?

SPEAKER_02 1:46

Right. So the idea with accelerated bonus depreciation is that it allows you to deduct a fixed percentage of an asset's cost up front instead of spreading out the deduction over the life of the asset. And under previous law, bonus depreciation had declined to 40% for 2025 and was set to be completely phased out by 2027. And under the bill, this deduction has been permanently reinstated to 100%. And this applies to most non-residential assets placed in service after January 19th of 2025. So this includes things such as equipment, furniture, machinery, certain vehicles, and so

Section 179 Limits And Phaseouts

SPEAKER_02 2:29

on. And then in addition to the change in bonus depreciation, section 179 depreciation has also changed. And the change has to do with the dollar limitation and the phase-out floor. So with section 179, you can elect to deduct a dollar amount for depreciation of your assets that you purchase. So under the bill, the section 179 limit has been increased from 1 million to 2.5 million. And this applies to most assets placed in service after December 31st of 2024. And this also applies to machinery, office equipment, furniture, tools, and so on. So if the business has under $2.5 million of additions, they can claim Section 179 depreciation on everything. But if they exceed $4 million, there begins to be a reduction in the Section 179 that you can take. And this kind of highlights that Section 179 is primarily for smaller and mid-sized businesses and not larger corporations.

State Conformity And Timing Strategy

SPEAKER_01 3:46

So, Bryce, what are the tax planning implications businesses need to consider with these changes?

SPEAKER_02 3:54

Right. So I think the biggest thing that we see has to do with state conformity. So not all states conform to the federal tax rules in that. Some states might completely disallow bonus depreciation or might have different Section 179 limitations. So you might receive a large deduction federally, but you might end up receiving a lower deduction at the state level, meaning you'd end up owing more tax. And it's also not just a one-year thing. And another consideration is the timing of your investments. So if you make a capital investment before year end, it might be, well, if you intend on making a capital investment before year end, it might be more beneficial to push it off to next year if you expect to receive a lot more income. Or if you know you're not going to have a lot of income next year, it might make the most sense to just go ahead and make the capital investment before year end to offset the current year income.

Manufacturing Incentives And QPP

SPEAKER_01 5:05

So, Bryce, another big selling point on the new bill was a boost for domestic manufacturers. What is a big change that will impact manufacturers?

SPEAKER_02 5:18

Right. So part of the big bill was to incentivize domestic manufacturing and production to decentvize businesses from offshoring that type of work. So as part of as part of the bill, there's actually a new provision in the tax code which allows for 100% bonus depreciation on qualified production property, which is really unprecedented, as it allows businesses to claim an immediate deduction for certain non-residential property and improvements that would have otherwise been depreciated over decades.

SPEAKER_01 5:55

Now that's very helpful overall. What type of property is considered qualified production property?

What Qualifies For Production Property

SPEAKER_02 6:04

Right. So qualified production property is the portion of any non-residential real property that is used as an integral part of a qualified production activity, which is the manufacturing, production, or refining of a qualified product. So think of anything like metal fabrication, uh, machinery components. Um and these activities have to um be done in the US. These properties have to be placed in service in the US and owned outright by the business. It can't be leased property, and it doesn't include the portion of the property that's um used in non-production activities. So the parking lot, the office space, the land is not eligible for the deduction.

R&D Expensing And Retroactive Options

SPEAKER_01 6:52

So, Bryce, another hot topic was the potential to reinstate accelerated deductions for research and development expenses. What did the bill do to address this?

SPEAKER_02 7:05

Right. So domestic research and development expenses are now fully deductible, starting with the 2025 tax year, whereas previously businesses were required to capitalize and amortize the RD expenses over 60 months. Foreign research must still be capitalized, but any research and development expenses incurred uh domestically are fully deductible starting with 2025.

SPEAKER_01 7:35

Now, this will be very helpful for businesses who have research and development. What are some of the planning ideas these types of businesses should consider?

SPEAKER_02 7:47

Right. So one of the um most important pieces is that uh small businesses uh with annual gross receipts of 31 million or less can actually elect retroactive treatment, uh, meaning that any businesses

Section 163(j) Reverts To EBITDA

SPEAKER_02 8:03

that previously capitalized RD expenses are able to go back and take the full deduction for those expenses as opposed to amortizing them. So this can be done by amending previous tax returns or um electing to accelerate the remaining capitalized RD expenses over one year or ratibly over two years. Um, and this is important to bring this to the attention of your tax advisor now since the election must be made uh no later than July 4th of 2026. And businesses may also be able to deduct unamortized amounts incurred before uh January 1st of 2025 that might be still sitting on the balance sheet. Um and then on the other side, taxpayers may also elect to annually continue capitalizing uh research and development expenses.

SPEAKER_01 9:07

Now, what other significant changes were in the bill?

SPEAKER_02 9:12

Right. So in a previous podcast episode, uh we had went through the

QSBS Holding Period And Caps

SPEAKER_02 9:18

uh section 163 J business interest deduction limitation, and we went through how that amount is calculated based on 30% of your adjusted taxable income. And so this calculation has changed under the new bill, and starting with tax years after uh December 31st, 2024. Adjusted taxable income is now computed differently by adding back depreciation, amortization, and depletion, which is the EBITDA-based uh version of the calculation that had expired in 2021. Uh, so this effectively increases the taxpayer's ATI and therefore increases the the amount of business interest deduction that's available for the taxpayer. And this applies to uh larger businesses with 30 million of gross receipts. And this kind of goes hand in hand with the expanded depreciation deductions. And the other significant change that I wanted to bring to everyone's attention has to do with another podcast episode where we went through the ins and outs of section 1202 qualified small business stock. Um, and there were three three important changes made. Um, one is there's a reduction of the minimum holding period um for the qualified small business stock. So uh the holding period has been reduced from five to three years. So for a three-year holding period, you get a 50% exclusion, four years, 75%, and then five years, 100%. Additionally, the flat cap on the maximum amount of capital gains that you can exclude from a single issuer has been increased from 10 million to 15 million. And there's also been an increase on the maximum aggregate gross asset value of a qualifying uh C corporation from 50 million to 75 million.

SPEAKER_01 11:20

Now,

Closing Advice And How To Reach Us

SPEAKER_01 11:22

Bryce, what would be some closing advice you would give to business owners wondering what they should do now?

SPEAKER_02 11:30

Uh planning. So every business and their owners have different unique tax situations. Um one size fits all. So it's important that they reach out to their advisors to discuss the tax implications and any tax planning opportunities that could be done before the end of the year while also planning for future years. Um now's the time to plan ahead and take full advantage of these new opportunities that we discussed today. And if anyone out there listening would like to contact me or the firm to discuss how the bill might impact you or your business, feel free to call us at 413-739-1800 and ask for Bryce.

SPEAKER_01 12:13

Well, Bryce, thank you for walking us through that. We'll see you next time.

SPEAKER_02 12:17

Sounds good. Thank you, Sophia.

SPEAKER_00 12:20

Thanks for listening to the Knowing What Counts Podcast. Ready to optimize your wealth and protect your future? Visit the MPgroupCPA.com or call 413 739 1800 to connect with our team of experts. Remember, success is about knowing what counts.