Top 10 Things CPAs Must Know for TY 2025

It’s been an eventful year in the world of tax.

After months of political activity – and a dramatic 24 hour “vote-a-rama” – the One, Big Beautiful Bill Act (OB3) was signed into law on July 4, 2025. The legislation has brought sweeping changes to corporate tax provisions, opening opportunity in some areas while limiting others.

Tax season is imminent and time is short. Let’s cut right to what you must know for TY 2025.

10. Recent R&D Case Law Testifies to Significance of Contract Interpretation 

The “funded research” exclusion is a complexity commonly encountered when companies employ a third-party contractor. In these cases, R&D Tax Credit eligibility often hinges on contractual language and interpretation. The right phrase – or lack thereof – can make the difference between a valuable tax offset – and a disallowance.

Unfortunately, the tax code doesn’t explicitly define contractual “magic words” that indicate eligibility. Since professionals can’t rely on legislation, they’re turning to litigation, drawing conclusions from landmark cases in recent contract law.

Don’t let your clients miss out on benefit because of legalese — attorneys experienced in R&D tax law and contract interpretation can make all the difference.

9. Sec 179 Limits Significantly Increase

The OB3 doubled the overall expensing limitation under Sec. 179, boosting it from $1.25M to $2.5M. The phase-out threshold also enjoyed an increase to $4.0M. These raises represent another win for small businesses, empowering them to further invest in themselves.

Sec. 179 Expensing grew in popularity when bonus depreciation rates declined. Now that bonus depreciation has returned to 100% – see below – taxpayers should still consider the strategic utility of Sec. 179.

8. Qualified Opportunity Zones Made Permanent

Opportunity Zones are here to stay under the OB3 – but with a few changes. Governors will select new zones decennially using stricter income criteria, but rural OZs will be incentivized with a three-fold potential benefit.

Under the OB3, investors in a standard OZ will receive a 10% basis step-up after holding the investment for five years. But if they’ve invested in a specifically designated Qualified Rural Opportunity Fund (QROF), the basis step-up jumps to a massive 30%.

7. C-PACE Financing Compliments Federal Energy Tax Incentives

Savvy investors are combining front-end funding sources like C-PACE with back-end tax incentives to make sustainable construction deals happen.

C-PACE funding is used to support energy-efficient improvements and doesn’t preclude investors from claiming an incentive later. We’re seeing thoughtful taxpayers stack the benefits, using C-PACE funding to pay for HVAC upgrades, for example, and then claiming the 179D Deduction after the fact.

Additionally, C-PACE programs generally require an energy audit of the building, as does the 179D Deduction. As such, taxpayers who obtain C-PACE funding are already set to claim the 179D Deduction with no additional effort.

The 179D Deduction is slated to sunset 6/30/2026 – see below – but there is ample time to take advantage of this unique one-two punch combination.

6. The OB3 Gifts Wind and Solar Incentives with a More Generous Timeline

While several energy incentives are slated to sunset next June – see below – the OB3 chose to extend the window of opportunity for wind and solar renewable systems.

The Investment Tax Credit (ITC) and Clean Electricity Investment Credit (CEIC) were assigned a later placed-in-service date than the rest of their cohort. Under the OB3, wind and solar projects must be placed-in-service by 12/31/2027 – with one exception.  If construction begins within one year of the OB3’s passing – i.e. on/before 7/4/2026 — taxpayers have up to 4 years from the beginning of construction to place the system into service and qualify for the Credit.

(Other types of systems were not included in the premature sunset established by the OB3, and will terminate on 12/31/2032, as established in the Inflation Reduction Act.)

Taxpayers considering wind and solar systems do have a more generous timeline, but it’s still a hard and fast one.

5. New Form 6765 in Effect for TY 2026, Optional for TY 2025

Form 6765 has undergone a major revamp – and the changes are more than just skin-deep.

The updated Form now requires a level of granular detail far surpassing older versions. Section G, in particular, requires filers to list their Top 50 business components — or the business components that comprise 80% of their QREs — and provide the EIN and PBA code of the researcher, the information sought to be discovered, and the associated QREs.

To further complicate matters, wages associated with each business component must be reported by category – wages paid to those performing research, wages paid to those directly supervising research, and wages paid to those directly supervising research.

Compliance with these changes is no simple task and expanded documentation practices may be required. The IRS recognized this, and on 10/1/2025 released Rev. Proc. 2025-99, which states that the new Form is obligatory for TY 2026, but optional for TY 2025.

Even though the form is no longer required for TY 2025, now is the time to ensure that your clients are prepared to comply – and that they are working with a partner who is prepared to navigate these changes.

Consider making this year a “dry run” — if your clients are able to provide all the required data to complete the new Form, fantastic.  If not, they’ll be able to identify reporting gaps and take steps to fix them while there’s still time.

4. A Trio of Energy Incentives Scheduled to Sunset – But Benefit is Still Possible

The OB3 assigned a sunset date of 6/30/2026 to three of our favorite incentives, but each still presents meaningful opportunity.

The 6/30/2026 date means something slightly different for each incentive:

• 179D Deduction: Construction must begin by 6/30/2026 in order to claim
• 45L Credit: Dwelling unit must be sold/leased by 6/30/2026 in order to claim
• EV Charging Station Credit: Equipment must be placed-in-service by 6/30/2026 to claim

Taxpayers have until June to break ground on 179D projects, lease 45L units, or place EV chargers in service. There’s still time to benefit from these incentives, even if they do sunset as scheduled.

And there’s a silver lining – the sunsets may or may not happen as scheduled. These incentives have historically phased in and out, and these sunset dates may be modified or eliminated by future legislation.  In fact, on October 29^th, House Democrats introduced the Energy Independence and Affordability Act (EIAA), which would eliminate the sunset date associated with 179D.

So keep an eye on the calendar – and on the news — while encouraging your clients to make timely decisions. But know that this is likely not the last we’ll see of this popular trio.

3. Qualified Production Property (QPP) Established

Section 168 (n) of the OB3 created a new property category exclusive to production facilities. Qualified Production Property (QPP) is any portion of U.S. non-residential real property that a taxpayer uses for a qualified production activity. For a limited time, QPP is eligible for 100% bonus depreciation under the OB3. This is a significant win, but taxpayers must be aware of several important caveats:

• Only parts of a facility directly related to production activity may qualify, meaning QPP must be carefully identified via cost segregation study
• The facility must be owner-occupied
• The property must be depreciated using MACRS lives

Our flowchart can help determine whether a certain area may be QPP-eligible.

Keep in mind that QPP is eligible for 100% bonus for a limited time, if additional requirements are met.

2. Mandatory Amortization of Sec. 174 Expenses Repealed

The OB3 established a new Section 174(A), which permits the immediate deduction of Sec. 174 research expenditures for TY 2025 and beyond. This effectively reverses the TCJA provision that mandated amortization beginning in TY 2022.

Mandatory amortization of Sec. 174 expenses caused taxpayers to see a higher net taxable income initially. Additionally, there was a great deal of confusion regarding precisely which expenses fell under the Sec. 174 umbrella.

The OB3 eliminates these challenges moving forward, while offering opportunities that mitigate the impact of prior amortization.

For a very limited time, smaller taxpayers may be able to retroactively deduct past amortization. Taxpayers of all sizes have the option to deduct all remaining unamortized costs from TY 2022-2024 over 1 year (TY 2025) or split them over 2 years (TY 2025 and TY 2026). This amortization recovery election must be made on the taxpayer’s TY 2025 return.

Clients who hesitated to claim the Credit due to the “amortization situation” should be encouraged to consider the incentive in light of these taxpayer-friendly changes.

1. 100% Bonus Depreciation Restored — Permanently

Just a few months ago, bonus depreciation was at 40% under the TCJA rules and — barring congressional activity — falling.

Congressional activity did indeed occur, and taxpayers were delighted to discover that the OB3 permanently reinstated 100% bonus for qualified assets placed-in-service on/after 1/20/2025.

The return to 100% bonus “super-charges” the cost segregation study, boosting results significantly for new construction, acquisitions, and renovations.

Consider a dealership that underwent a refresh – new facade, new interior, new finishes:

• Depreciable basis: $3.25M
• Engineers moved: 8.4% to 5-Year, 3.8% to 15-Year, 28.4% to 15-Year QIP

With 100% bonus, the first-year tax savings more than doubled.

Unsurprisingly, demand for cost segregation studies continues to rise under the OB3. Be sure to select the right partner, and let us know if we can help.