U.S. corporations should watch for federal agencies to continue publishing guidance interpreting major new tax provisions in the One Big Beautiful Bill Act to help them fully unlock some key benefits, tax practitioners say.
The OBBBA that was signed into law in July retained the 21% corporate income tax rate that would otherwise have expired in 2026 and materially changed cost recovery rules, in some instances permitting companies to write off capital expenditures in 12 months instead of 39 years, tax experts from the consulting firm Alvarez & Marsal said during a Feb. 18 webinar.
But the Treasury Department and Internal Revenue Service still need to provide taxpayers with more guidance on how to interpret the law, including defining key terms contained in the legislation.
Much of that work will be completed by the IRS Office of Chief Counsel, which must decide which items need to be addressed immediately and which can wait, Kevin Jacobs, national tax office practice leader with Alvarez & Marsal Tax, said during the virtual event.
"There are still a lot of unanswered questions that people are wrestling with," Jacobs said during the event.
One of the IRS’ latest pieces of guidance on OBBBA came Feb. 18 in the form of additional interim direction regarding the application of the corporate alternative minimum tax. The announcement followed Notice 2026-11, issued Jan. 14, which dealt with the tax law's 100% bonus depreciation rules. And there's more to come.
Looking ahead, more clarity and guidance on domestic research and development expense depreciation under Internal Revenue Code Section 174A could be issued "anywhere between April and late May or early June, at the latest," Lucy Siegel, national tax office director at Alvarez & Marsal, said during the event.
Shifts for cost recovery
The law contains several key depreciation and amortization changes: it makes permanent depreciation rules for two asset classes and allows taxpayers to depreciate 100% of domestic research and development costs in the first year, the tax specialists said.
The law "really represents a change in how we might think about cost recovery. For many taxpayers, we thought about tax planning around acceleration of cost recovery provisions and how to accelerate deductions from a timing perspective, benefiting from the time value of money," Alvarez & Marsal Tax national tax office managing director Rayth Myers, who participated in the event, said in an interview.
Now, depreciation can occur in one year, which if elected will lower taxable income and free up corporate capital immediately. The changes should compel companies to re-think their tax strategies, Myers said.
"It is a detailed modeling exercise, because every taxpayer's facts are going to be slightly different," Myers said. “That's a good chunk of what we're doing right now, is helping clients think through their fact patterns and unlock the most benefit under these provisions."
Qualified production property
A new section of the Internal Revenue Code, 168(n), offers beneficial deprecation rules for "qualified production property," which generally applies to non-residential real property used in production, manufacturing, and refining.
The rule will allow companies to write off some expenses in one year that under the old rules took decades to depreciate. "This is the first time, at least in my career and I believe my lifetime, that bonus has been allowed on 39-year property — as long as it falls within this bucket" of qualified property, Siegel said.
"If you are a company that deals with inventory, you know that sometimes production can be very broadly defined, something as simple as mixing two chemicals," she said. The term qualified production property "is not perfectly defined" in the law, though, and taxpayers will need further government regulation to benefit fully from the law, she said.
Also, corporations have to consider how different elements of the law work together in order to optimize benefits offered by it, the practitioners said.
