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Ext. PublicationKey OBBBA Changes Affecting 2025 Estimated Tax Payments
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The One Big Beautiful Bill Act (OBBBA) introduced several taxpayer-friendly changes that may directly affect your 2025 estimated tax payments. These areas are worth reviewing to avoid surprises and ensure compliance.
Fixed Asset Additions and Bonus Depreciation
For fixed asset additions after January 19, 2025, the 100% bonus depreciation is back. Taxpayers can still choose to opt out or apply the reduced 40% bonus depreciation rate for 2025 additions.
When evaluating assets, it’s important to remember that both the acquisition date and the placed-in-service date matter. For example, an asset placed in service after January 19, 2025, may not qualify for 100% bonus depreciation if it was acquired under a written binding contract or as part of a project that began earlier.
For large self-constructed projects placed in service after January 19, 2025, some or all costs may still qualify for 100% bonus depreciation, even if certain elements started before the cutoff.
Interest Expense Deductibility (Section 163(j))
Section 163(j) has been updated to add back depreciation and amortization when calculating adjusted taxable income (ATI). This effectively restores the pre-2022 rules and generally provides a more favorable outcome.
This change is particularly important for businesses with Section 163(j) carryforwards or those historically close to the deduction limit. In addition, the OBBBA excludes global intangible low-taxed income (GILTI) income from the ATI calculation, which is particularly relevant for taxpayers with foreign operations.
Research and Experimental Expenses
Taxpayers with research and experimental (R&E) expenses have new options. Current year expenditures, as well as previously capitalized amounts, may now be deductible. In some cases, prior year returns for 2022, 2023 and 2024 can also be amended.
For taxpayers who cannot or choose not to amend prior returns, the OBBBA provides an election to deduct the unamortized balance of domestic R&E expenditures incurred in taxable years beginning after December 31, 2021, and before January 1, 2025. Options include:
- Deducting all remaining unamortized amounts in the first taxable year beginning after December 31, 2024
- Deducting the amounts ratably over a two-year period starting with that year
To maximize the benefit, review R&E tax assets, evaluate the impact of the election on liabilities and adjust 2025 estimated payments accordingly.
The Bottom Line
The OBBBA includes many taxpayer-friendly provisions, but they also come with added complexity. Reviewing your positions now will help ensure accurate 2025 estimated tax payments and reduce audit risk. For information about how the OBBBA and other recent tax law changes may affect your 2025 estimated tax payments as well as your overall tax position, contact us. Our tax professionals are here to help.
©2025
