Outlined below is a high-level overview of the most relevant – and what we consider to be – the most time sensitive provisions in the nearly 900-page OBBBA (including 525 pages of tax specific amendments), signed into law by President Trump on July 4. Most notably, the Act  averted a projected $4 trillion tax increase that would have occurred had the Tax Cuts and  Jobs Act of 2017 (“TCJA”) been allowed to expire. 

Two key words that describe the impact of this legislation are – “permanent” and  “predictability. The Act makes permanent the dramatic corporate tax rate reduction from  35% to 21% and most of the tax cuts contained in TCJA that would have expired on December  31, 2025. This stability should enable businesses and their advisors to plan and budget with  greater confidence from a federal tax perspective. Second, the Act should allow your  business and its advisers to reasonably predict the future now, federal tax-wise, allowing you  to set budgets accordingly.  

Looking ahead, the next frontier will be watching how the states – including the Alabama  Legislature and the Alabama DOR – respond to these sweeping changes. We do not foresee  Governor Ivey calling a special session this fall to react to OBBBA, and thus it is likely that  any Alabama-specific changes will be addressed during the Spring 2026 regular session.  

Given the flood of OBBBA-related webinars, newsletters, and media coverage, we’ve  distilled the information to focus below on the “Top 10” Alabama business-specific  provisions of OBBBA, many of which retroactive in nature. This summary offers a 30,000- foot view to help you focus on what matters most. 

(1) 100% “bonus depreciation” for most depreciable assets placed in service after January  20, 2025 and now including a 100% deduction for certain U.S. real property used as an  integral part of the manufacturing of tangible personal property (note the retroactive  effective date).

(2) Immediate expensing of tangible personal property and “canned” computer software, up  to $2.5 million annually, placed in service on or after January 1, 2025 (again, note the  retroactive effective date). 

(3) Immediate expensing of qualified research and experimentation (R&D) expenditures  domestically and the ability to deduct the unamortized portion of qualified R&D  expenditures made before January 1, 2025 (again, note the retroactive effective date). 

(4) Business interest deductions increased to 30% of EBITDA, effective January 1, 2026. 

(5) Effective January 1, 2025, the SALT cap is increased to $40,000 for married taxpayers  filing jointly (“MFJ”) but with phase-outs beginning at $500,000 (MFJ). Thankfully, the final  version of the bill deleted the “haircut” that previous versions of the bill would have imposed  on deducting state pass-through entity (“PTE”) taxes, so that planning opportunity remains  viable for owners of PTEs such as S corporations and LLCs in Alabama and most but not all  the other states (some states have 12/31/25 sunset dates). 

(6) For PTE owners, the temporary Section 199A deduction of 20% of “qualified business  income” was made permanent and the phase-out thresholds increased. 

(7) Qualified opportunity zones, new markets tax credits, and low-income housing credits  are now permanent or enhanced. 

(8) Charitable contributions by C corporations are limited – only deductions in excess of 1%  of federal taxable income – and as before, the 10% cap remains in place. 

(9) “Exemption” (really, a deduction) for employees receiving overtime wages – up to$25,000  annually for MFJ ($12,500 otherwise), with a phase-out beginning at $300,000 modified  adjusted gross income (MFJ). Retroactively effective beginning January 1, 2025 and sunsets  after December 31, 2028. Remember that the Alabama overtime pay exemption expired June  30, 2025. Employers will have to keep up with overtime pay and separately report it on the  employee’s Form W-2. 

(10) “Exemption” for qualified tip income reported via payroll – same deduction limits and  phase-outs as with overtime pay but with specific criteria for what constitutes “tip income.”  Also, effective beginning January 1, 2025 through December 31, 2028.

There is actually a third critical word to consider – 'modeling.' Since many of these provisions  are retroactive to specific dates in January, while others won’t take effect until next year,  businesses need to meet with their accounting firms ASAP, study the details of those  provisions affecting your business, and decide which capital expenditures, hiring plans, etc.  should be accelerated and which should be delayed until next year. 

Just a brief reminder that this provided summary of the OBBBA is meant to give a general  overview. Each OBBBA-related change to federal tax law comes with its own detailed  qualifications and deadlines, so please do not rely on this summary as definitive tax advice.  Be sure to promptly check in with your tax professionals to get guidance specific to your business and situation.