One Big Beautiful Bill Act (OBBBA): 5 key considerations for CFOs

Here are five critical moves Chief Financial Officers (CFOs) should consider in response to the new tax legislation:

1. Capital deployment: Full expensing and qualified production property

The Act permanently reinstates 100% bonus depreciation for qualified property acquired and placed in service in the US after January 19, 2025. This provision allows businesses to fully expense the cost of eligible assets in the year they are placed in service, reducing taxable income and enhancing after-tax cash flow.

Key considerations:

• Qualified property: Includes machinery, equipment, and certain production assets, including non-residential real property used for manufacturing, which are critical for operational efficiency and expansion.
• Permanent provision: This change eliminates the phased-in sunset of the 2017 law.
• Changes in clean energy credits: To be eligible for certain clean energy tax credits, clean energy projects cannot source materials from “foreign entities of concern,” creating a need for increased supply chain visibility.
• Impact on cost of capital: Immediate expensing reduces the effective cost of capital, potentially improving investment returns and encouraging further capital deployment.
• Structures: In addition, the Act provides for the ability, temporarily, to expense the cost of structures that house qualified production assets. This may present companies with additional opportunities to maximize their capital spending plans.

2. Debt refinancing: Section 163(j) interest deductibility

The OBBBA makes permanent the calculation of adjusted taxable income for the purposes of the interest deduction limitation under Section 163(j), aligning it with earnings before interest, taxes, depreciation, and amortization (EBITDA). 

Key considerations:

• Permanent EBITDA calculation: Provides a more favorable interest deduction limit, enhancing financial flexibility.  Although CFOs should be aware that it also includes unfavorable changes relating to foreign income inclusions effective in 2026 which may reduce the interest deduction limit for some companies.
• Leverage strategy: Allows companies to maintain higher leverage levels without exceeding interest deduction limits, enhancing capital efficiencies and lowering the after-tax cost of debt.
• Debt refinancing considerations: Many companies have debt with stated interest rates lower than market coming due and may need to refinance. The new tax legislation could improve the after-tax cost of rolling over those obligations.

3. Investment in Research & Development: Section 174 Research & Experimental Expenditures

The OBBBA introduces a new Section 174A, allowing for the immediate deduction of domestic research or experimental Research & Development (R&D) expenditures. This provision is designed to incentivize innovation and US-based R&D investment.

Key considerations:

• Immediate deduction: Businesses can fully deduct domestic R&D expenses in the year they are incurred, potentially boosting after-tax cash flow and freeing up capital for further innovation and investments.
• Various amortization and deduction elections available: The new tax legislation permits elections to capitalize and amortize domestic R&D expenses over various amortization periods, providing flexibility.
• Incentive for domestic investment: Immediate expensing applies only to US-based research, encouraging an increase in domestic R&D activities. Offshoring R&D activities continue to be amortized over 15 years, potentially diluting the cash flow benefit. Companies may consider modeling the impact of reassessing innovation strategies with a shift toward US-based innovation. 
• Access to prior deductions: The act provides a mechanism for firms to recoup amounts they have capitalized as domestic R&D costs in recent years.
• Potential interaction with CAMT: On the other hand, the accelerated deductions provided by this provision of the Act could have the effect of pushing firms into the Corporate Alternative Minimum Tax (CAMT), so some careful modeling is likely needed.

4. Accounting for Income Taxes: Financial statement impact

The Act may have significant implications for financial reporting and accounting for income taxes. CFOs should be aware of the following key considerations.

Key considerations:

• Interim and annual reporting: For US Generally Accepted Accounting Principles (GAAP) purposes, the tax effects of the legislation must be recognized in the period of enactment, requiring timely updates to financial statements. This requires companies to act now to evaluate and understand the impact.  
• Adjustments to income tax accounts: The income tax account balances will be required to reflect the new tax provisions, potentially impacting balance sheets and income statements, for the financial statements that include the period of enactment. For example, the current income tax payable will need to be recalculated based on the applicable provisions. 
• Disclosure requirements: If the enactment date of the One Big Beautiful Bill Act is after the reporting date but before the financial statements are issued, entities should consider whether subsequent event disclosure may be appropriate. In addition, SEC-registered entities are required to provide certain forward-looking information in Forms 10-Q and 10-K outside of the financial statements related to “material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operating results or of future financial condition.” The accounting and disclosure requirements may require companies to model the impact of the Act prior to year-end or preparation of the federal tax return. 
• Changes in the finance information architecture: Changes in tax treatment as a result of the OBBBA may create additional granularity requirements in transactional data to support reporting requirements. Companies should evaluate their existing finance information architecture and related controls for the ability to support changes (ex., qualified production property) in tax reporting and the ability to automate required reporting.

5. Pillar Two compliance: Filing, reporting, and strategic readiness

Despite the G7’s recent announcement that the US would live ‘side-by-side’ with the global minimum tax of Pillar Two, there is, as of yet, no change to the compliance and other requirements for US parented multinational enterprises. CFOs should continue to monitor the Pillar Two requirements as filings and reporting deadlines approach for the 2024 tax year.

Key considerations:

• Meet 2024 filing deadlines: Confirm timely submission of all required Pillar Two filings for 2024 year-ends, including the GloBE Information Return, Safe Harbor, and Qualified Domestic Minimum Top-Up Tax calculations, as many jurisdictions now require these returns.
• Stay alert to possible changes: Continue monitoring OECD and G7 developments, but do not delay compliance in anticipation of potential changes. Immediate obligations remain unchanged. 
• Update financial reporting: Continue to reflect Pillar Two impacts in 2025 financial statements and disclosures, ensuring accuracy and transparency for stakeholders. Any future enacted legislation should be accounted for in the period of enactment.
• Coordinate across functions: Strengthen collaboration among tax, finance, and legal teams to address current compliance requirements and remain agile for any future regulatory shifts as future guidance is pending.

Key takeaways for CFOs:

• Plan for full expensing: Consider leveraging the permanent 100% bonus depreciation to evaluate capital deployment in the US, including for eligible production property used in manufacturing, and to improve after-tax cash flow.
• Evaluate debt strategies: Consider the new interest deductibility rules for existing debt and refinancing to improve after-tax cost of debt and assess the appropriate jurisdiction for additional borrowings.
• Boost domestic R&D investments: Analyze the immediate deduction for domestic R&D expenditures and impact on current innovation strategy, including location of intellectual property and ability to accelerate funding of transformation objectives. 
• Prepare for financial reporting and internal control changes: Confirm accurate and timely accounting and disclosures for the new tax legislation, including complex areas like valuation allowance considerations. In addition, as companies prepare to adopt these new tax rules, internal controls over financial reporting (ICFR) may need to be updated.
• Understand the global tax compliance landscape: Keep abreast of further tax regulatory guidance and implementation rules that may impact your tax strategy and financial planning, including potential changes to Pillar Two for US-headquartered multinational companies.

For a detailed analysis of the One Big Beautiful Bill Act , please refer to the full report published by Deloitte here.

Authors:

Evan Shea
Partner, Tax Legislative Marketplace Leader
and National Tax Strategic Growth Market Leader
Deloitte Tax LLP
evshea@deloitte.com

Omosede Ogiamien
Principal, Finance Transformation
Deloitte Consulting LLP
oogiamien@deloitte.com

Court Watson
Principal, Finance Transformation
Deloitte Consulting LLP
cowatson@deloitte.com

Tim Gaus
Principal, Supply Chain & Networks Operation
Deloitte Consulting LLP
tgaus@deloitte.com

Erik Smolders
Managing Director, Finance Transformation
Deloitte Consulting LLP
esmolders@deloitte.com

Carrie Lieberman
Senior Manager, Finance Transformation
Deloitte Consulting LLP
clieberman@deloitte.com

This article contains general information only and Deloitte is not, by means of this article, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this article.

As used in this document, “Deloitte” means Deloitte Tax LLP, and Deloitte Consulting LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2025 Deloitte Development LLC. All rights reserved.