Untangle regulatory confusion to stay compliant and optimize your corporate tax planning strategy.
Relying on outdated or incomplete resources when preparing federal taxes for a business is risky, particularly because the One Big Beautiful Bill Act (OBBBA) reshaped the tax landscape. With major provisions now made permanent, modified, or repealed, practitioners must ensure their federal tax planning strategies reflect current law, including the OBBBA, the Inflation Reduction Act (IRA), and the CHIPS Act.
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For corporate tax practitioners, it’s always important to stay on top of both new and modified federal provisions to understand how they may affect you or your client’s tax liability – and this year is no exception. Congress passed sweeping changes to the federal tax code with the One Big Beautiful Bill Act, including making permanent certain Tax Cuts and Jobs Act (TCJA) provisions, adding new tax deductions, increasing expending limits, and modifying credits, all of which impact corporate tax planning.
As tax practitioners prepare their corporate tax planning strategies for the year, some of the big-ticket items to watch for are outlined below. Corporate taxpayers and tax return preparers should be aware of new changes so they can leverage new benefits and navigate changing rules for credits and deductions.
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What OBBBA changed in corporate tax planning
In many ways, the OBBBA functions as the legislative successor to the TCJA. While the TCJA set a foundation for modern tax rules, the OBBBA restructured those rules by making some provisions permanent, modifying others, and repealing several items entirely. These changes now define the core parameters for federal corporate tax planning in 2026 and beyond. Practitioners should assess how the OBBBA’s federal business tax provisions realign key areas, including effective tax rates, international rules, and cost recovery.
Permanent under OBBBA
- 21% corporate income tax rate maintained as a permanent statutory rate
- Qualified business income (QBI) deduction
- Bonus depreciation restored to a 100% immediate expensing regime for property acquired after January 19, 2025
- Expensing of domestic research and experimental expenditures (§174A)
- One percent floor for deductions of corporate charitable contributions
- Revised definition of adjusted taxable income (ATI) for business interest deduction limitation (§163(j))
- Limitation on excess business losses
- Increased information reporting threshold for certain payees
- Form 1099-K de minimis exception
New, modified or extended
- New 100% depreciation deduction for “qualified production property placed in service before January 1, 2031
- Expanded capital gain exclusion for qualified small business stock (QSBS)
- FDII and GILTI deductions recharacterized as foreign-derived deduction-eligible income (FDDEI) and net CFC tested income (NCTI), with adjusted rates and definitions
- Revised base erosion and anti-abuse tax (BEAT)
- Increased dollar limits on §179 expensing
- Extended the §40A small agri-biodiesel producer credit through December 31, 2026
- Extended the §45Z clean fuel production credit through December 31, 2029
Repealed or allowed to expire
- Phase out of clean energy credits
For 2026 compliance and forward-looking tax modeling, the OBBBA requires corporations to recalibrate multi-year forecasts using the Act’s permanent and modified structures rather than legacy TCJA assumptions. Federal corporate tax planning for 2026 must consider how changes to §174 expensing, the §163(j) interest limitation, and FDDEI interact with both regular tax and corporate alternative minimum tax (CAMT) over time.
For detailed bonus depreciation modeling, practitioners can rely on Bloomberg Tax’s Fixed Asset solution, which incorporates all OBBBA cost-recovery updates and automatically reflects changes in depreciation schedules and multi-year projections.
Key corporate tax provisions modified by OBBBA
The OBBBA retained and refined several foundational corporate tax provisions originally introduced under the TCJA, and it now serves as the enduring statutory framework for federal corporate tax planning.
Below, we highlight some key federal tax policies under the OBBBA.
Corporate tax rate (21%)
The OBBBA maintains the 21% flat corporate income tax rate established under the TCJA. This continuation provides clearer multi-year modeling assumptions for federal corporate tax planning in 2026 and beyond, particularly for forecasting taxable income, evaluating entity structure, and aligning long-term capital investment strategies with a stable statutory rate.
Business interest expense deduction 2026 limits
The OBBBA preserves the §163(j) limitation but recalibrates how adjusted taxable income (ATI) is computed for purposes of determining the allowable business interest deduction. Under the updated framework, ATI is once again computed on an EBITDA-based measure, improving interest-deduction capacity relative to the EBIT standard that applied under the TCJA phase-in. As before, the deduction cannot exceed the sum of:
- Business interest income
- 30% of ATI (as defined under the OBBBA’s EBITDA standard)
- Floor plan financing interest
These updates have significant implications for capital-intensive and highly leveraged industries, including manufacturing, infrastructure, real estate, and private equity-backed portfolio companies. For 2026 and beyond, businesses should model the impact of ATI calculation under OBBBA to assess debt capacity thresholds, financing structures, and the after-tax cost of capital.
Net operating loss carryback and carryforward periods and limitations
The OBBBA leaves intact the core net operating loss (NOL) framework established by the TCJA. NOLs arising in taxable years after 2020 continue to carry forward indefinitely and remain subject to the limitation that permits offset of up to 80% of taxable income in any carryforward year. No carrybacks are permitted for post-2020 NOLs.
The OBBBA also makes the excess business loss (EBL) limitation under §461(l) permanent. Disallowed losses convert into NOL carryforwards, reinforcing the need for strategic long-term modeling of loss utilization, especially for businesses with volatile earnings or significant pass-through investments.
For corporate taxpayers, these OBBBA NOL rules and the permanent EBL limitation require careful coordination of income timing, estimated tax computations, and multi-year investment planning. Business loss carryforward strategy considerations include managing the interaction between NOL limitations, the CAMT position, and international inclusion items when projecting taxable income beyond 2025.
Business meal and entertainment expense deductions
The TCJA generally eliminated deductions for business entertainment expenses, though limited exceptions apply. Taxpayers may still deduct 50% of the ordinary and necessary food and beverage expenses associated with operating their trade or business. Notably, food and beverages provided at an entertainment activity remain deductible if the cost is separable from the cost of entertainment.
The OBBBA modifies the business meal deduction rules scheduled to take effect under §274(o) beginning in 2026. While §274(o) would have disallowed a 100% deduction for expenses associated with employer-operated eating facilities, including food and beverages provided for the employer’s convenience, the OBBBA creates targeted exceptions for businesses that sell food or beverages to customers and also provide meals to employees, as well as for fishing vessels and certain fish-processing operations.
Section 174 R&E expense amortization
The OBBBA reverses the TCJA requirement to amortize research and experimental (R&E) expenditures under new §174A and restores the prior law rule permitting immediate expensing, but only for qualifying domestic research and development costs. Foreign R&E treatment remains unchanged and must be capitalized and amortized over 15 years.
Section 168(k) bonus depreciation
The OBBBA restores 100% bonus depreciation for qualifying property acquired after January 19, 2025, reversing the phase-down scheduled under the TCJA. The reinstated provision applies to tangible property with a recovery period of 20 years or less, including both new and used property.
In addition to reinstating 100% bonus depreciation, the OBBBA creates an elective full-expensing regime for “qualified production property,” a defined category of building property used in production activities. To qualify, construction must begin after January 19, 2025, and before January 1, 2029, and the property must be placed in service before January 1, 2031.
Taxpayers evaluating major development or modernization projects should incorporate these provisions into long-range capital investment strategies and fixed asset modeling.
CHIPS Act
The Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022 introduced a new credit for investments in semiconductor manufacturing: the Advanced Manufacturing Investment Credit under §48D. Eligible taxpayers could claim a credit equal to 25% of their qualified investment for the tax year in an advanced semiconductor manufacturing facility.
The OBBBA increased the credit amount to 35% for property placed in service after December 31, 2025.
Unlike similar incentives and credits, which apply only to §1245 property, this credit applies to §1250 property. Companies may elect to treat the credit as a direct payment against tax liability for the year, effectively making the credit refundable.
Companies intending to claim this credit must pay attention to certain nuances, including the transition rule and various effective dates with respect to when the property was placed in service, when construction began, and which costs were incurred prior to the enactment date.
This credit sunsets quickly. The OBBBA did not change the termination date, so it doesn’t apply to property beginning construction after Dec. 31, 2026.
Inflation Reduction Act corporate tax credits and incentives
Signed into law in August 2022, the Inflation Reduction Act (IRA) is a climate bill that included new tax credits and extended certain existing credits designed to incentivize businesses and individuals to boost their use of renewable energy and reduce greenhouse gas emissions.
The OBBBA modified or clarified several of the IRA’s provisions.
Changes to foreign tax credit limits
The foreign tax credit (FTC) is designed to relieve taxpayers from double taxation when income is subject to both U.S. and foreign tax. Subject to various limitations, the amount of tax paid to foreign countries and U.S. possessions on foreign-source income offsets any U.S. tax that would be paid on the same income.
The OBBBA restructured the FTC limitations and sourcing/allocation regime for multinational corporations for tax years beginning after December 31, 2025. One of the key changes is the reallocation of deduction and apportionment burdens previously assigned to the §951A/net controlled foreign-source corporation tested income (NCTI) basket. Interest expense and R&E deductions are now excluded from this category, increasing the foreign-source taxable income (FSTI) in the NCTI basket and increasing the potential FTC limitation amount.
In addition, the OBBBA increases the “deemed paid” FTC rate for NCTI from 80% to 90%, meaning a foreign effective tax rate of approximately 14% may now suffice to generally eliminate residual U.S. tax on tested income.
Along with these changes, the OBBBA introduced new sourcing relief, permitting up to 50% of income from U.S.-produced inventory sold abroad (and attributable to a foreign fixed place of business) to be treated as foreign-source income for FTC limitation purposes.
These revisions require multinational taxpayers to revisit their basket classifications, expense allocation methods, sourcing models, and CFC-income inclusion frameworks to optimize FTC utilization.
Increased research and development investment credits
The R&E tax credit (§41) is a dollar-for-dollar reduction against a taxpayer’s tax liability for qualified research expenditures for the tax year. The IRA doubled the amount of the credit (from $250,000 to $500,000) that qualified small businesses can use to offset payroll taxes for tax years beginning after 2022. Eligible research costs include those paid or incurred for research conducted by the taxpayer as well as research conducted on the taxpayer’s behalf.
While the OBBBA didn’t make significant changes to §41, conforming amendments made by the law mean that taxpayers claiming the full research credit must reduce their deductible R&E expenses by the amount of the credit or elect a reduced credit under §280C(c) to retain the full deduction without a corresponding reduction.
Corporate alternative minimum tax on adjusted financial statement income
The IRA added a CAMT on an applicable corporation’s adjusted financial statement income (AFSI), which is essentially the corporation’s book income. Under §55 – §59, the CAMT is imposed on C corporations that are “applicable corporations” for taxable years beginning after 2022.
An “applicable corporation” is any corporation that meets an average annual AFSI test for one or more taxable years before the current taxable year but ending after Dec. 31, 2021. The AFSI test is met if the corporation’s average annual AFSI for the three-taxable-year period ending with that taxable year exceeds $1 billion.
For corporations that are members of a foreign-parented multinational group, the AFSI test is met if the average AFSI for the three-taxable-year period ending with that taxable year exceeds $100 million for the corporation itself and $1 billion for the foreign-parented multinational group.
While the OBBBA did not change the CAMT, other changes that reduce taxable income may negatively affect an organization’s CAMT positions.
The IRS released two notices announcing plans to partially withdraw the proposed CAMT regulations issued in 2024. Notice 2025-46 and Notice 2025-49 currently provide IRS CAMT interim guidance.
Excise tax on stock repurchases
The IRA also added a nondeductible 1% excise tax on the fair market value of stock repurchased by a publicly traded U.S. corporation (including affiliate acquisitions) during the taxable year. The IRA stock repurchase tax also applies to certain affiliate acquisitions or repurchases of publicly traded foreign corporation stock. The fair market value of stock repurchases is reduced by the value of shares issued by the corporation during the same taxable year.
A repurchase is defined as a §317(b) redemption or an “economically similar transaction.” There are numerous exceptions to the tax, including a de minimis exception where total stock repurchased during the taxable year does not exceed $1 million. Treasury and the IRS finalized regulations for recordkeeping and reporting in June 2024, and finalized regulations pertaining to the application of the stock repurchase excise tax in November 2025.
The excise tax applies to stock repurchases made after Dec. 31, 2022. Companies with stock repurchase programs or M&A activity should pay close attention to updates regarding the excise tax.
The OBBBA did not amend the stock buyback excise tax 1% rate. However, an increase in the tax rate was discussed during the drafting process and could be included in future legislative proposals.
IRA energy credit repeals
The OBBBA accelerates the phaseout and repeal of several clean-energy incentives originally expanded under the IRA.
- The Alternative Fuel Vehicle Refueling Property Credit (§30C) now applies only to property placed in service on or before June 30, 2026.
- The §179D Energy Efficient Commercial Buildings Deduction is eliminated for projects beginning construction after June 30, 2026.
- The OBBBA repealed the Clean Electricity Investment Credit (§48E) and Clean Electricity Production Credit (§45Y) for wind and solar facilities placed in service after 2027, unless construction begins on or before July 4, 2026.
- The Advanced Manufacturing Production Credit (§45X) is narrowed, with wind energy components becoming ineligible after 2027 and new rules added for critical minerals, including a separate expiration schedule for metallurgical coal.
- The Qualified Commercial Clean Vehicle Credit (§45W) now applies only to vehicles acquired on or before September 30, 2025.
Buying and selling energy tax credits
The IRA rule allowing companies to sell their tax credits is popular among businesses and corporate taxpayers.
Taxpayers may continue to transfer eligible clean energy credits during their remaining availability. However, the OBBBA imposes new restrictions on transfer involving specified foreign entities and heightens domestic content requirements for several programs.
International corporation tax provisions (post-TCJA & current law)
The OBBBA redefines Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII). These provisions are now renamed net CFC-tested income (NCTI) and foreign-derived deduction-eligible income (FDDEI), respectively.
It sets the FDDEI deduction at 33.345%, leading to an effective tax rate of 14% and sets the NCTI deduction at 40%, resulting in an ETR of 12.6% for tax years beginning after December 31, 2025.
The OBBBA also increases the percentage of deemed-paid foreign taxes under NCTI that can be claimed as a credit from 80% to 90% and eliminates the deemed tangible income return (DTIR) and net deemed tangible income return (NDTIR).
The OBBBA raises the base erosion and anti-abuse tax (BEAT) rate to 10.5% beginning in 2026, a rate lower than the scheduled increase to 12.5% that was set to go into effect under the TCJA rules.
Modifications under OBBBA shape their current operations, but they remain central to international tax planning for U.S. corporations.
How Bloomberg Tax supports strategic corporate tax planning
Bloomberg Tax offers comprehensive research to tax professionals focused on corporate tax planning. Our trusted, detailed tax information enables you to stay on top of the latest tax developments. Download our Guide to the One Big Beautiful Bill Act for a deep dive into the tax provisions and credits enacted as part of the OBBBA, including information on eligibility and effective dates.
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