The Senate just introduced The One Big Beautiful Bill, and it’s filled with significant updates for CPAs, business owners, real estate investors, developers, and innovators. While tax policy isn’t always the easiest thing to digest, this bill includes real, practical changes that could impact how you plan, invest, and grow over the next few years.
Whether you're building properties, purchasing equipment, or developing new technology, this bill brings back several key tax incentives and extends others, some of which were on the verge of phasing out. Below, we’ve outlined what’s in the bill, why it matters, and what each section could mean for you.
Bill Highlights:
- Bonus Depreciation (100%) Restored – Deduct 100% of qualifying property costs in the year placed in service, including past projects, to boost cash flow and tax savings.
- Section 179 Expensing Expanded – Instantly expense up to $2.5M in equipment or property purchases with new, higher limits and inflation adjustments.
- Section 179D Energy-Efficient Deduction – Claim up to $5.00/sq ft for energy upgrades in new builds and renovations—applies to both private owners and public building designers. The bill keeps the incentive in place but only until the end of 2026 after which it officially ends!
- Section 45L Home Energy Credit – Get $2,500–$5,000 per unit for building energy-efficient single-family or multifamily housing. But this tax credit officially ends at the end of 2026.
- Section 174/174A R&E Deduction Reinstated – Immediately deduct domestic R&D expenses instead of amortizing over five years, retroactive to 2022.
- Section 41 R&D Tax Credit Enhanced – Continue claiming 6–20% credit on qualified research while also deducting those same costs under Section 174A.
- Opportunity Zones Made Permanent – Investors now have long-term certainty to strategically plan OZ investments, with expanded options for rural areas and enhanced transparency requirements.
1. Bonus Depreciation (100%) is Fully Restored
Bonus depreciation has been one of the most valuable tax strategies for real estate investors and business owners. After gradually phasing down over the last few years, it’s now back in full force.
With 100% bonus depreciation fully restored starting January 19, 2025, real estate investors and business owners have a powerful opportunity to supercharge their tax strategy, both going forward and looking back.
For the current year, that means any qualifying personal property (items with a useful life shorter than 20-years) placed in service after that January date can be fully deducted in the same year, unlocking significant cash flow. Cost Segregation super charges real estate acquisitions by dissection a building to separate the personal property from the building to capture this large deduction. This can be applied to new purchases and ground-up builds, but also capital improvements and renovations like interior upgrades, FF&E, and land improvements.
If you paused or delayed projects during the phase-down years, now is the time to act. With 100% bonus depreciation fully restored, this change creates a window of opportunity For at least another 5 years.
What Changed:
- 100% bonus depreciation is restored for property acquired after January 19, 2025 and placed in service before January 1, 2030
- Extended through January 1, 2031 for long-production-period or aircraft property
Why It Matters:
This change brings back the ability to deduct the full cost of eligible property in the year it's placed in service, improving cash flow and encouraging reinvestment.
Eligible improvements include:
- Non-structural interior improvements
- Furniture, fixtures, and equipment (FF&E)
- Land improvements (e.g., parking lots, landscaping)
It also renews the full benefit of cost segregation studies, especially valuable for real estate investors looking to accelerate depreciation.
2. Section 179 Expensing – Higher Limits, More Flexibility
Section 179 allows businesses to immediately expense the full cost of qualifying equipment and property. With this update, it becomes even more accessible for growing businesses. This is retroactive to December 31, 2024 and confirmed through 2030.
What Changed:
- Expensing cap increased to $2.5 million
- Phaseout begins at $4 million
- Indexed for inflation starting in 2026
Why It Matters:
This is particularly useful for owner-operated businesses making capital purchases like equipment, vehicles, or leasehold improvements. It also works well in tandem with cost segregation and bonus depreciation.
Note: Section 179 does not apply to residential rental properties.
3. Section 179D – Energy-Efficient Commercial Building Deduction
Energy efficiency continues to be a priority in tax legislation. Section 179D rewards those who improve building performance through HVAC, lighting, and envelope systems. The bill keeps the incentive in place but only until the end of 2026 after which is officially ends!
Key Highlights:
- Offers up to $5.00 per square foot in tax deductions
- Applies to new construction or major renovations
- Requires compliance with ASHRAE energy standards
Why It Matters:
This incentive stays intact for now under the bill and continues to allow architects, engineers, and other designers to claim the deduction on government or nonprofit buildings. For large commercial and multifamily projects, these deductions can total in the hundreds of thousands.
As we look ahead to 2025, Section 179D remains a critical incentive for both private property owners and design professionals working on public or government buildings. With up to $5.00 per square foot in deductions available for energy-efficient upgrades like HVAC systems, lighting, and building envelopes, this is a powerful opportunity to reduce tax liability while improving building performance.
But there’s a catch—the bill keeps this incentive in place only through the end of 2026. After that, it officially ends.
For those planning new construction or major renovations, acting early is essential to ensure these benefits are built into your project timeline and fully realized. Architects, engineers, and design firms can also continue claiming these deductions on qualifying government and nonprofit projects, making this one of the few direct federal incentives available to them—but only for a limited time.
The bottom line: being proactive now means maximizing savings and staying ahead in a market where energy efficiency and sustainability are no longer optional, they're expected.
4. Section 45L – Energy-Efficient Home Credit
The 45L credit has been a valuable incentive for developers and builders focused on energy-efficient residential properties. This bill ensures it continues in its enhanced form.
Credit Details:
- $2,500 per unit for ENERGY STAR-qualified homes
- $5,000 per unit for homes certified as DOE Zero Energy Ready
- Applies to both single-family and multifamily housing
Why It Matters:
The 45L credit has been a valuable incentive for developers and builders focused on energy-efficient residential properties. This bill ensures it continues in its enhanced form—but only through the end of 2026, when the credit is officially set to expire. Now is the time to take advantage of it while it's still available.
5. Section 174 / New 174A – Immediate Deduction for R&D Expenses
Under the 2017 TCJA, research and experimental (R&E) costs had to be amortized over five years, limiting liquidity for startups and innovation-driven companies. That’s now reversed.
What Changed:
- Retroactively repeals the amortization rule for tax years beginning after Dec 31, 2021 and before Jan 1, 2026
- Introduces Section 174A:
- Allows immediate deduction of qualified domestic R&E expenses
- Optional amortization remains for foreign R&D
Why It Matters:
This is a major win for companies focused on innovation. Startups, manufacturers, and tech firms now have the ability to deduct qualified R&D costs in the year they’re incurred, improving cash flow and reinvestment potential. This is retroactive to December 31, 2024 and confirmed through 2030.
6. R&D Tax Credit (Section 41) – Enhanced and Still Available
The R&D tax credit remains a powerful tool for companies increasing their research activities and it now works even better with the changes to Section 174A.
Key Highlights:
- Credit remains unchanged (typically 6–20% of qualified research expenses)
- Now works in synergy with 174A:
- Companies can take both the deduction and the credit on eligible costs
Why It Matters:
This dual benefit strengthens the incentive to invest in research and development. Additionally, small businesses with less than $5 million in gross receipts can still use the credit to offset payroll taxes, a critical cash flow advantage for early-stage companies.
For 2025, the R&D tax credit continues to be a major win for innovative businesses, but now it comes with even more upside. Thanks to the updated treatment of Section 174A, companies can now take both the R&D tax credit and a deduction on the same qualifying expenses. That’s a meaningful shift in how companies can recover their R&D investments.
For businesses that didn’t apply the credit in previous years, this change is especially important.. For startups and small businesses under $5 million in gross receipts, the ability to offset payroll taxes remains in place, offering critical relief for companies reinvesting heavily in growth and innovation.
7. Opportunity Zones – Now Permanent
Opportunity Zones (OZs) have helped direct capital into underserved areas since 2017, but their temporary nature created some uncertainty. That changes with this bill.
What Changed:
- Makes the Opportunity Zone program permanent
- Adds stricter reporting and transparency requirements via:
- Section 6039K
- Section 6039L
- Introduces Qualified Rural Opportunity Funds to expand OZ investment into rural areas
Why It Matters:
This offers long-term clarity and planning opportunities for investors using OZ strategies. While the new compliance measures raise the bar for reporting, they also add credibility to the program—and new ways to support rural development.
What’s next for you?
The One Big Beautiful Bill revives and strengthens several key tax incentives across real estate, energy, and innovation. Whether you’re expanding your portfolio, launching a product, or making energy-efficient upgrades, these updates offer meaningful opportunities to reduce tax liability and reinvest in growth.
The bill is more than just policy, it’s a signal to build, create, and innovate with confidence.
At Engineered Tax Services (ETS), we work directly with property owners, developers, and businesses to help them proactively navigate the evolving tax landscape, especially in light of major legislation like the One Big Beautiful Bill.
With powerful updates like the return of 100% bonus depreciation, expanded Section 179 and 179D deductions, and enhanced incentives under Sections 45L, 41, and 174A, there are more ways than ever to improve cash flow, offset capital expenditures, and fuel long-term growth.
Whether you’re building, renovating, innovating, or investing, our team of tax and engineering, experts help you identify, calculate, and claim every eligible credit and deduction, past and present.
From energy-efficient design to advanced R&D strategies and Opportunity Zone investments, we guide you through every step with one goal in mind: helping your business thrive.
Now is the time to be proactive—these incentives reward those who plan ahead.
Contact Us If you want to better understand how these changes apply to your specific situation, our team is here to help.
