When H.R. 1 (the “One Big Beautiful Bill Act”) was signed into law on July, 4, 2025, it introduced sweeping changes across multiple areas of policy and taxation (see REDW’s article Key Changes Now In Effect). While the legislation addresses many complex issues, the tax provisions alone create significant implications for businesses and individuals. The scope and breadth of these changes vary considerably by industry sector, with some experiencing substantial benefits while others face new challenges or the elimination of previous advantages. Understanding how these changes specifically affect your industry is crucial for effective planning and compliance.
NOTE: Most provisions are subject to exclusions, effective date ranges, and/or gross income limitations. Please consult your trusted tax advisor for guidance.
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Notable Individual Provisions in H.R.1
Changes to the deduction thresholds for individuals should not be overlooked as they will affect many businesses and charitable organizations with their adoption.
- Tips deduction (Section 70201): Subject to specific occupations and not to exceed $25,000, as well as income limitations.
- Overtime pay deduction (Section 70202): Limited to $12,500 for individuals or $25,000 for joint returns and income limitations.
- SALT cap (Section 70120): The increase from $10,000 to $40,000 through 2029 and phased down beginning at $500,000 modified adjusted gross income. This deduction is especially relevant to those paying high state taxes or significant property taxes
- Car loan interest (Section 70203): Effective for taxable years 2025 through 2028, above-the-line deductions up to $10,000 for new US-assembled personal use vehicles, subject to income limitations.
- Charitable deduction (Section 70424): This deduction is increased from $300 to $1,000 per taxable year for single filers and $2,000 for joint filers with no itemization required.
Highlighted Business Provisions
Businesses at different life-cycle stages, those that are asset or service heavy are subject to:
- Bonus depreciation (Section 70307): 100% for qualified production property where construction began after Jan 19, 2025, and is placed in service before January 1, 2031.
- Section 179 changes (Section 70506): The maximum deduction has doubled to $2.5M in 2025 for qualifying asset purchases.
- R&D expenses (Section 70302): Makes immediate deduction allowable for domestic R&D expenses. Foreign R&D remains with its 15-year capitalization treatment.
NOTE: Companies with annual revenue under $31M may elect to retroactively amend prior year tax returns to claim tax R&D deductions beginning after December 31, 2021. Contact your trusted tax professional for further details.
- Advanced manufacturing investment credit (Section 70308): Increased 25% to 35% for property placed in service after December 31, 2025.
- Clean energy (Section 70507): Section 179D and other credits terminated with varying effective dates.
- TCJA Extensions (Section 70421): The expiration date of the Tax Cuts and Job Act provisions was removed and made permanent. This extends tax rates, the 20% QBI deduction, and the estate tax exemption.
H.R.1: Healthcare and Government Potential Impacts
Encouraging Research and Development (R&D) within the healthcare sector may support advancements in medical research and potential disease mitigation. Bonus depreciation should be taken for qualified equipment purchases and planning should be done to make sure purchases and other capital expenditures are timed to be most beneficial to the organization.
Contact the REDW SALT professionals for assistance to optimize your tax position and ensure compliance. Healthcare operations must also carefully assess the impact that the cuts to Medicaid contained in H.R.1 will have on there revenue streams and make any necessary adjustments. The American Hospital Association’s press release following passage of the bill by the Senate was dominated by their concern for impact to Medicaid on the health care system and by extension, to those they serve.
Our trusted tax advisors will analyze your equipment purchases for bonus depreciation and review R&D classifications for immediate deduction eligibility.
H.R.1 for Hospitality & Service Industries
The American Hotel and Lodging Association (AHLA), the National Restaurant Association (NRA), as well as the American Gaming Association (AGA) representing the $329 billion casino gaming industry are composed of key stakeholders that are heavily impacted by the no tax on tips and overtime provisions of H.R.1.
Tipped servers, bartenders, and the overtime pay of hourly employees remains subject to FICA/Medicare and Withholding that employers will continue to collect and remit. Employees will utilize a new above-the-line tax deduction on qualified tip income of up to $25,000 upon filing their annual tax returns. For hospitality and restaurant operators, implementing these new changes may require updates to payroll reports and forecasts and the review and monitoring of potential workforce changes.
Clear communications to employees should also be prepared and distributed so they understand these mid-year changes to their pay structure. Casino, hotel, and restaurant operators should also anticipate the full expensing of capital equipment and plan to adjust reports and forecasts to reflect this. When businesses assess these changes, ensure that investment opportunities are concurrently evaluated as funds become available.
Work with REDW’s professional tax team to ensure compliance with new tips and overtime tax treatments and optimize your deduction strategies.
H.R.1 and the Manufacturing Sector
Groups like the National Association of Manufacturers (NAM) laud the passage of H.R.1 saying that it increases American competitiveness, supports investment and innovation, and provides certainty to small manufacturers.
Each manufacturer should ensure that they leverage the new law’s Section 179 deductions, bonus depreciation, and advanced manufacturing credits while capturing research and development expenses that fall under its provisions.
Those that planned for the sunsetting of TCJA must reassess their activities to align with the change to permanence. Careful timing of asset acquisitions can significantly impact your bottom line and each asset class should be evaluated to achieve optimal results.
The expiration of clean energy provisions will have a major impact on manufacturers that had geared up to support the initiatives that they applied to. Those operations will require significant evaluation of their financial positions to remain operational.
Documenting—and appropriately classifying—Research and Development expenses should be a particularly high-level priority for all manufacturers. Unfortunately, many R&D expense opportunities continue to be missed.
Schedule a tax optimization review to properly classify R&D expenses, maximize Section 179 deductions, and plan asset acquisition timing for bonus depreciation.
Contact an REDW State and Local Tax expert for more information.
Opportunities for the Real Estate Sector with H.R.1
For real estate professionals and investors, the SALT (state and local tax) cap increase from $10,000 to $40,000 offers significant relief that will trigger planning opportunities that should be captured immediately. REDW’s trusted SALT advisors are available to assist you. Large property taxpayers should be particularly attuned to making sure they are leveraging the new SALT cap to their benefit.
The extension of the mortgage interest deduction and the enhanced charitable donation deduction should also benefit the profession by allowing more funds to be retained by their clients—prospective homeowners. The National Association of Realtors (NAR) believes H.R.1 will strengthen both the real estate and general economy and encourage growth in its sector.
Partner with REDW’s state and local tax (SALT) consultants to restructure your tax planning around the increased deduction cap and optimize transaction timing.
Planning for Industry Impact with H.R.1
The tax implications of H.R.1 vary significantly across industries and individual circumstances. Whether your business benefits from new deductions and credits, faces the elimination of previous incentives, or will be navigating a combination of both, professional guidance is essential for understanding your specific situation. Our tax professionals can help you assess both the opportunities and challenges these changes present for your business, ensuring you remain compliant while optimizing your tax position in this new landscape.
Schedule your H.R.1 implementation review with REDW—we’ll analyze which provisions apply to your business, create a compliance timeline, and develop customized strategies to maximize your tax benefits before key deadlines.
