'Big Beautiful Bill' Tax Legislation Brings Immediate Planning Opportunities for CPA Firms

Just days after the latest tax legislation—informally dubbed the “Big Beautiful Bill”—was signed into law, significant planning opportunities are already emerging. With provisions impacting bonus depreciation, Section 179 expensing, and the long-awaited fix to Section 174, CPA firms should begin evaluating client strategies now to ensure compliance and maximize benefit.

Bonus Depreciation: Certainty at Last

One of the most welcome changes for businesses and advisors alike is the permanent extension of 100% bonus depreciation. This move brings long-term certainty to tax planning, especially for clients with multi-year capital expenditure timelines.

However, the rules come with complexity. For constructed assets, eligibility for the new bonus provisions hinges not just on the placed-in-service date, but on when the contract was entered into. Projects under a binding contract before January 20, 2025 may still fall under the old rules, even if placed in service later in the year.

This creates additional documentation and planning requirements—especially in 2025—where certain components of the same project (e.g., carpeting vs. parking lots) may qualify under different rules. For advisors, it’s critical to review contract dates and assess how these timing issues affect bonus eligibility.

Section 179 Expensing: Simpler but Still Strategic

Section 179 also saw updates under the new law, increasing the deduction limit to $2.5 million with a phase-out beginning at $4 million. Unlike bonus depreciation, Section 179 does not involve a binding contract rule—eligibility is purely based on the placed-in-service date after December 31, 2024.

Because many states conform to Section 179 but not to bonus depreciation, strategic use of both provisions remains important. Clients may benefit from electing 179 over bonus in certain cases to align with state treatment or better manage taxable income.

Section 174: Expensing Is Back—with Important Options

One of the most anticipated changes in the new legislation is the permanent fix to Section 174, allowing for immediate expensing of research and experimental (R&E) costs starting in tax years beginning after December 31, 2024.

For large taxpayers, this means the end of the burdensome five-year amortization requirement introduced by the TCJA. Beginning in 2025, these taxpayers can deduct current-year 174 costs in full and may also elect to deduct remaining unamortized 174 costs from 2022–2024 in one of two ways:

• Fully in 2025, or
• Spread evenly over 2025 and 2026

This change requires filing a Section 481(a) adjustment via Form 3115. Strategic planning for implementation of the accelerated deduction and the opportunity to address prior year changes should begin now.

Small Taxpayer Advantage: Retroactive Amendments

For small taxpayers—those with average gross receipts from 2022-2024 under $31 million—the law provides a unique opportunity:

They may choose to amend prior-year returns (2022, 2023, and 2024) to retroactively expense 174 costs rather than amortize them.

This could significantly reduce prior-year taxable income and result in refunds but also requires strategic planning. For example:

• Are the returns under audit or already closed?
• Will pulling deductions into prior years affect loss limitations or other elections?
• Does the timing align with the client’s current-year tax position and cash flow needs?

While this offers relief, it also creates urgency. The election must be made within a specific timeframe—generally one year from the law’s enactment (July 4, 2025)—or the opportunity may be lost.

Alternatively, small taxpayers can opt to follow the same forward-looking approach as large taxpayers and expense any remaining amortized costs in 2025 (or over two years).

Missed R&D Credits? Time to Reevaluate

Many taxpayers either ignored 174 requirements or opted not to claim the Section 41 R&D credit in recent years, hoping Congress would retroactively fix the issue. Now that the fix is in place, those decisions warrant reevaluation.

For clients who did not comply with 174 and skipped the R&D credit, the next few months are critical. CPA firms should help clients weigh whether:

• To amend prior returns to properly claim the R&D credit and align with 174 compliance
• To file a protective accounting method change in 2025
• Or to accept the current-year treatment and focus on prospective compliance

Each decision hinges on a detailed review of the client’s R&D activities, credit potential, unamortized 174 balances, and risk exposure. With IRS guidance pending, thoughtful modeling and communication are key.

Don’t Wait: Now Is the Time for Tax Planning

With extended 2024 returns due this fall and the 2025 tax year already shaping up to be a year of transition, CPA firms should act quickly. Key priorities include:

• Identifying large vs. small taxpayer status across your client base
• Modeling 174 adjustments and 41 credit opportunities
• Advising clients on whether to amend, expense, or defer
• Preparing required Form 3115 filings and documentation
• Aligning with cash flow, loss utilization, and partner distribution strategies

The interplay between 174 expensing, R&D credits, and bonus/179 depreciation means planning needs to cover multiple tax years, not just the current or upcoming one.

If you have questions about how these changes affect your clients—or how to prioritize planning across 2024 and 2025—reach out to our team today. We’re committed to helping CPA firms stay ahead of the curve with practical, informed guidance tailored to each unique situation.