Tax Law Changes Under the OBBBA: What Businesses and Investors Need to Know.

The One Big Beautiful Bill Act (OBBBA) has brought sweeping updates to the tax code that impact individuals, businesses, and investors alike. While some provisions provide relief, others create potential pitfalls, particularly for companies engaged in federal tax planning, business litigation, or mergers and acquisitions (M&A).

At Spizzirri Law LLC, we guide clients through complex federal tax law changes to avoid costly mistakes. Below, we break down the most important updates from the OBBBA and what they mean for your business and long-term strategy.

Six Key Tax Pitfalls to Watch

1. Personal Exemptions Eliminated- Personal exemptions remain permanently repealed under the OBBBA. This underscores the need for proactive planning around dependents and available credits.

2. Suspended Deductions Continue- Certain deductions, like mortgage interest above capped amounts and job-related moving expenses, are no longer available. Businesses must carefully plan executive relocations and financing structures.

3. Charitable Deduction “Floor”- Starting in 2026, only charitable contributions above 0.5% of adjusted gross income (AGI) qualify for deductions. This reduces the tax benefit of itemizing and may encourage donors to accelerate giving.

4. The Return of the Pease Rule- High-income taxpayers once again face phased-out itemized deductions, which can significantly affect individuals in higher brackets. This is especially important for owners and executives involved in M&A activity.

5. Changes to Energy Credits- While some home energy-efficient credits remain, broader clean energy tax benefits are being repealed. Businesses should consider accelerating qualifying expenditures before 2026.

6. Gambling Loss Limits- Deductions for gambling losses are now capped at winnings, limiting the flexibility that professionals once had in this area.

Why this matters: These changes could create unexpected liabilities if not factored into business deals or tax strategies.

Business Write-Offs and IRS Scrutiny

Businesses can now accelerate write-offs for certain building components (like electrical systems or restaurant equipment) through cost segregation studies. This strategy can unlock significant tax savings and improve valuations during mergers or acquisitions.

However, the IRS often challenges aggressive write-offs. Companies must carefully document studies and be prepared for potential disputes.

Social Security Planning Remains Critical

While the OBBBA doesn’t change taxation of Social Security benefits, it adds a new bonus deduction for seniors. Strategic planning, such as realizing capital losses before year-end or deferring taxable income, can still make a meaningful difference for retirees and their estates.

IRS Issues Identity Theft Warnings

The IRS continues to warn against rising tax-related identity theft. Scams increasingly involve phishing emails, fake refund notices, and fraudulent phone calls. Businesses, especially those undergoing transitions such as mergers, should strengthen compliance protocols to avoid data breaches and fraudulent filings.

Relocation Expense Deductions Eliminated

The OBBBA makes permanent the suspension of moving expense deductions for most taxpayers, excluding active-duty military personnel. For businesses, this impacts relocation packages for executives and employees, an important consideration in employment contracts and deal negotiations.

Final Takeaway

The OBBBA creates a new tax landscape filled with both opportunities and risks. Whether you are planning a merger, addressing litigation exposure, or developing long-term federal tax strategies, these changes demand careful attention.

At Spizzirri Law LLC, we work closely with businesses and individuals to anticipate these challenges and position them for success under the new law.

Thanks for Reading.

MD

Reference: www.SmallBizTax.net : Small Business-Tax Strategies: Vol. 20, No. 9