February 19, 2026 Unlocking Opportunities with the One Big Beautiful Bill

Businesses can unlock the full potential of OBBB by aligning tax strategies with operational and investment goals.

By Kellie Becker

The opportunities created by H.R.1., the One Big Beautiful Bill Act (OBBB), are significant, but the optimal implementation can be unique for each business. The impact of the laws’ incentives depends heavily on how they support or detract from a company’s broader operating and investment goals. Getting the most out of the law requires companies to look beyond single provisions and evaluate how tax decisions align with existing operations, multi-year plans, customer mix, tax rates, domestic footprint and growth priorities. By quantifying how different strategies play out, companies can make more informed decisions that yield stronger outcomes over time.

With that in mind, here are several important areas to consider when taking a strategic approach.

Current Tax Structure

When the Tax Cuts and Jobs Act (TCJA) passed in 2017, many companies reassessed whether it was better to operate as a corporation or a pass-through entity. New OBBB provisions, including updates to Section 1202 and other incentive-related changes, may affect whether those earlier decisions are still advantageous.

Section 1202 offers manufacturers a powerful opportunity to significantly reduce taxes on exit by allowing up to 100% gain exclusion on the sale of qualified small business stock, up to the greater of $10 million or 10 times basis. Manufacturing generally qualifies as an eligible trade or business, thoughtful upfront structuring and documentation can position owners to capture substantial tax-free value at sale. These rules make Section 1202 an essential planning tool for manufacturers seeking to maximize after-tax outcomes.

Revisiting the full set of tax rules that apply to corporations and pass-through entities is a worthwhile exercise to validate that the company’s 2017 choice still fits their current circumstances and future direction while continuing to optimize tax structures.

Interest Expense Limitations

Companies with interest expense limitations may be able to increase their deductible interest under the OBBB by rethinking how certain costs are treated. A review of last year’s tax return or a conversation with a tax professional can reveal a company’s existing limitations. Then, a thorough assessment of the law’s interest expense limitation calculation changes can highlight opportunities. For instance, instead of expensing all domestic research and development (R&D) costs in the current year, a company might opt to capitalize and amortize these costs over multiple years, which may increase allowable interest expense deductions since amortization is added back when applying the interest expense limitation.

Similar logic applies to eligible repair, maintenance and spare parts costs. Companies that capitalize and depreciate these costs over multiple years may benefit, as depreciation is another add back in the interest limitation formula, while immediate repair expenses are not. For companies spending millions annually on repairs, maintenance or spare parts, these adjustments can translate into substantial savings. Some selling, general and administrative (SG&A) expenses may also merit a review under this framework.

Research Expenditures

The location of R&D activities is another matter that warrants a fresh look. Companies should review where their research activities take place and whether shifting more development work to the U.S. makes strategic and financial sense. Although domestic research can sometimes carry a higher upfront cost, the OBBB’s relevant tax benefits may outweigh those cost differences. While the new law allows for the immediate deduction of domestic R&D, foreign R&D is still subject to capitalization and a 15-year amortization period. For companies with significant R&D investment, moving more research activity stateside could produce accelerated tax deductions, not to mention potential R&D tax credits.

Real Estate Plans

For companies with a domestic footprint, the OBBB’s new Qualified Production Property provisions offer strong incentives to invest in capital assets and facilities. Given that, U.S.-based companies are weighing whether to expand domestically or maintain a growing global presence. Moreover, some foreign-based companies are considering setting up manufacturing plants in the U.S. to take advantage of the new provisions.

Although OBBB incentives can influence these decisions, they should not be the sole driver. Other factors, such as customer location, supply chain efficiencies, workforce availability, and regulatory requirements, all play a role.

Businesses already considering a domestic expansion may find that the new accelerated depreciation provisions speed their decision because they can significantly improve project economics. For example, a $10 million investment in a newly constructed facility, financed at a 12 percent cost of capital, could generate net present value savings of approximately $2.2 million at a 29.6 percent tax rate, potentially offsetting a meaningful portion of construction costs. A cost segregation study can help identify which portions of a project qualify for faster depreciation, ensuring the company captures the full benefit available.

That said, companies considering an expansion should be aware of and comfortable with the strict timing. Construction must begin after January 19, 2025 and be completed by January 1, 2029, with the new facility placed in service by January 1, 2031. The property must be new, located in the U.S. and used by the owner as an integral part of a manufacturing process. There is an option for this benefit to apply to purchase of existing facilities, which must meet additional requirements related to prior use.

Before moving forward, companies should conduct a comprehensive evaluation to align real estate decisions with overall operational and financial goals. Developing a clear business case, including a quantified tax impact, can help determine whether to invest now, wait or reconsider the project altogether.

Bonus Depreciation Versus Section 179

Decisions in this area play an important role in how and when companies realize the OBBB’s benefits of accelerated tax depreciation. Both of these provisions generally apply to tangible personal property, such as machinery, equipment, office furniture and certain non-residential real estate improvements. However, there are some distinct differences in terms of timing and financial benefit.

Section 179 allows 100 percent expensing up to $2.5 million in 2025, with the deduction phasing out once more than $4 million of assets are placed in service. Bonus depreciation, meanwhile, sits at 40 percent for qualifying assets acquired and placed in service prior to January 19, 2025. It then jumps to 100 percent for those assets acquired and placed in service after the January date.

One practical distinction between the two provisions is at the state level. Many states allow a Section 179 deduction, while most do not conform to bonus depreciation rules. By thoughtfully layering these provisions and timing asset purchases accordingly, companies can improve both federal and state tax outcomes.

Taxes on Foreign-related Income

Companies with international activity should pay attention to changes affecting how specific types of foreign-related income are taxed, including global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII). The OBBB adjusts the rules used to calculate taxes on these income areas, effective in 2026.

In practical terms, the legislation removes an asset-based calculation (the qualified business asset investment (QBAI)) that previously reduced taxable income in some cases. As a result, companies may see higher taxable income related to foreign operations, while also seeing improved deductions tied to export-related income. The law also simplifies how expenses like interest and research costs are allocated, which may improve overall tax efficiency.

Starting in 2026, the effective tax rates for these income categories are adjusted to roughly 14 percent. Because the impact will vary widely, companies should model these changes to understand how they affect future tax positions and planning opportunities.

Putting the OBBB to Work

The OBBB offers potentially transformative opportunities for manufacturers and other industries, but the greatest benefits are unlikely to come from one-size-fits-all decisions or rushed action. Companies that step back and work with experts who have deep knowledge of the bill and its nuances can more fully evaluate its impact in the context of their entire tax and business picture. By modeling outcomes over time, companies can see the potential effect of different decisions, increasing the likelihood that the ultimate strategy realizes lasting value.

About the Author:
As the leader of Plante Moran’s national manufacturing and distribution practice, Kellie Becker leads an 800-person team serving more than 3,000 clients across several sectors, including automotive and mobility, food and beverage, plastics, metals, transportation, and logistics. With nearly 25 years of experience, clients turn to her for her industry and technical expertise on navigating the complexities of doing business abroad. Kellie also serves on the board of directors for the National Association of Manufacturers, as well as the chairperson of the Praxity Global Tax Group and a board member of the Praxity Membership Committee.

Read more from the author:

Navigating the new $100,000 H-1B visa fee: What you need to know | Plante Moran, Sept. 24, 2025

The One, Big, Beautiful Bill: Key insights for manufacturers | Plante Moran, July 18, 2025

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