Initial Takeaways from the House Ways and Means Tax Bill ("The One Big Beautiful Bill")
While this legislation still has a long path to becoming law and is expected to undergo significant revisions to gain the necessary votes in the House, we want to keep you informed of key tax provisions that may directly impact your clients and the services we provide. We are continuing to review the full bill text and will provide a more detailed analysis as updates unfold.
Below is a high-level overview of the current proposals relevant to cost recovery, energy incentives, and R&D tax strategies
Bonus Depreciation
- 100% Bonus Depreciation Restored: Property acquired after January 19, 2025, and placed in service before January 1, 2030 (or January 1, 2031 for longer production period property) would be eligible for full expensing.
- Qualified Production Property Added: Non-residential real property with construction beginning after January 19, 2025, used in the manufacturing, production, or refining of a qualified product could now qualify for 100% bonus depreciation—potentially expanding eligibility for clients in industrial sectors.
Section 174 – Research & Experimental (R&E) Expensing
- Immediate Deductibility Reinstated: For domestic R&E expenditures incurred between January 1, 2025 and December 31, 2029, businesses would be allowed to fully deduct expenses in the year incurred, rather than amortize over five years.
- This is a significant rollback of current Section 174 amortization rules and would simplify tax reporting while improving cash flow for innovative companies.
IRC §45L – New Energy Efficient Home Credit
- Sunset Date Announced: The 45L credit would no longer be available for homes acquired after December 31, 2025. However, there is a grace period: homes for which construction begins before May 12, 2025 would have until December 31, 2026 to qualify.
- Builders and developers should review construction timelines now to ensure projects remain eligible under current rules. Importantly, the provisions of the Commercial Building Tax Deduction under §179D remain unchanged.
IRC §45Y and §48E – Clean Energy Production & Investment Tax Credits
- Phaseout Begins in 2029: These technology-neutral credits will begin a 20% annual reduction starting in 2029, reaching 0% by 2032.
- The bill includes provisions that would eliminate the transferability of certain tax credits related to energy investments.
- Taxpayers planning long-term clean energy projects should consider accelerated timelines to maximize these incentives before the phaseout schedule takes effect.
We’ll continue to provide timely updates as this bill progresses. If you have clients potentially impacted by any of these provisions, we are here to assist with modeling scenarios, eligibility analysis, and proactive planning.
