What Is the OBBBA? The 2026 Finance Professional's Guide

The One Big Beautiful Bill Act (OBBBA) is the most sweeping overhaul of the U.S. tax code since the Tax Cuts and Jobs Act of 2017. President Trump signed it into law on July 4, 2025, and for CFOs, controllers, and tax directors, the question isn't just "what does it do", it's "what do we need to book, disclose, and file right now?"

This guide answers both.

Key takeaway: The OBBBA's enactment date (July 4, 2025) triggers ASC 740 deferred tax remeasurement in Q3 2025 for calendar-year companies. Q2 2025 filers disclose it as a subsequent event under ASC 855. Every public company with material deferred tax balances needs to act.

What Is the OBBBA and When Did It Become Law?

The OBBBA (H.R. 1, P.L. 119-21) is a federal budget reconciliation law signed on July 4, 2025. It passed the Senate 51-50 on July 1 (with Vice President Vance casting the tiebreaking vote), cleared the House 218-214 on July 3, and was signed the following day. The reconciliation vehicle let Republicans bypass the 60-vote Senate filibuster threshold.

The law contains hundreds of provisions spanning tax policy, federal spending, defense, immigration enforcement, Medicaid, and SNAP. For finance teams, the core story is tax: EY estimates the OBBBA delivers $4.5 trillion in net tax reductions over 2025-2034, of which $1.8 trillion accrues to the business sector.

As BARBRI summarized: "OBBBA represents one of the most significant federal policy packages since the Tax Cuts and Jobs Act (TCJA) of 2017. Much like TCJA, its changes span multiple sectors."

The ASC 740 Question Every CFO Must Answer First

Under ASC 740-10-45-15, the effect of a change in tax law is recognized in the period that includes the enactment date. The OBBBA was enacted July 4, 2025. For calendar-year companies, that means Q3 2025 (the quarter ending September 30, 2025) is the period of recognition, not Q2.

Here's where companies are getting tripped up:

• Q2 2025 10-Q filers (period ending June 30, 2025): the OBBBA is a subsequent event under ASC 855-10-50-2. Disclose it, but don't remeasure deferred tax balances yet.
• Q3 2025 10-Q filers (period ending September 30, 2025): this is the recognition period. Deferred tax assets and liabilities must be remeasured at the new enacted rates. The income statement effect flows through continuing operations.

Multiple public companies are already navigating this. One EDGAR filer's income tax note states: "On July 4, 2025, the One Big Beautiful Bill Act ('OBBBA') was signed into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act...", demonstrating the standard disclosure language companies are using in their income tax footnotes.

Another EDGAR subsequent event disclosure notes the OBBBA "includes significant provisions" and that the full financial impact is still being evaluated, consistent with ASC 855 requirements.

What If You Can't Quantify the Impact Yet?

Several OBBBA provisions require IRS and Treasury rulemaking before companies can reliably measure their deferred tax effect. ASC 740-10-S99 (formerly SAB Topic 5.D) addresses this: companies may disclose "incomplete accounting" for a tax law change when the measurement is not yet determinable, provided they describe the provisions affecting them and give a reasonable estimate where possible.

One public REIT put it plainly in its SEC EDGAR prospectus supplement: "The OBBBA is a complex revision to the U.S. federal income tax laws with potentially far-reaching consequences. The OBBBA will require subsequent rulemaking in a number of areas. The long-term impact of the OBBBA on us, our investors, our tenants and the real estate industry cannot be reliably predicted at this early stage of the new law's implementation."

That language is instructive for any company drafting its own Q3 2025 income tax footnote.

Key OBBBA Provisions: What Matters Most to Enterprise Finance Teams

Not all provisions carry equal weight for a mid-to-large enterprise. Here's what to prioritize, in order of materiality.

Bonus Depreciation and Section 179: Permanent and Expanded

The OBBBA makes 100% bonus depreciation permanent for qualified property acquired after January 19, 2025, and for specified plants planted or grafted after that date. This reverses the TCJA's phasedown schedule, which had reduced bonus depreciation to 40% in 2025 before full expiration.

For capital-intensive companies, this has a direct ASC 740 consequence: accelerated deductions create larger deferred tax liabilities. Those DTLs must now be remeasured at the new enacted rates in Q3 2025.

One election to know: for the first tax year ending after January 19, 2025, taxpayers may elect to deduct 40% instead of 100% (or 60% for long-production-period property and certain aircraft). This election may matter for companies managing their effective tax rate or CAMT exposure.

Section 179 expensing also received a permanent increase: the limit rises from $1,000,000 to $2,500,000 for property placed in service in tax years beginning after December 31, 2024.

TCJA Individual Rates Made Permanent

The 37% top individual income tax rate is now permanent, avoiding the scheduled revert to 39.6% after December 31, 2025. This matters directly for:

• Pass-through entity owners (partnerships, S-corps, sole proprietors)
• Executive compensation planning
• REIT investors, where the effective maximum marginal rate on ordinary REIT dividends is now 29.6% (37% x 80%, after the permanent 20% deduction for ordinary REIT dividends)

The standard deduction also increased: $15,750 for single filers and $31,500 for married filing jointly for tax year 2025, indexed for inflation going forward.

The 20% QBI Deduction: Now Permanent

The Section 199A qualified business income (QBI) deduction for pass-through entities is permanent under the OBBBA. It was set to expire after December 31, 2025. For partnerships, S-corporations, and sole proprietors, this is one of the most significant provisions in the law.

EY notes the OBBBA also changes other pass-through entity rules, including real estate-related pass-through provisions, signaling that a comprehensive review of partnership and S-corp tax planning is warranted.

International Tax: GILTI Renamed, FDII Modified, BEAT Updated

This is where multinational finance teams face the steepest complexity. The OBBBA restructures three major international tax regimes simultaneously:

Finrep has published a detailed breakdown of the GILTI-to-NCTI rename and its Q2 2026 Form 10-Q disclosure implications. The short version: the rate reconciliation line item changes, QBAI is eliminated, and the ASC 740 footnote language needs updating.

As KPMG notes, the OBBBA also interacts with global tax developments: the G7 agreement excludes US-parented groups from the UTPR (Undertaxed Profits Rule) and IIR (Income Inclusion Rule) under Pillar Two. For foreign-parented multinationals operating in the US, this is a critical planning consideration. See Finrep's Pillar Two ASC 740 guide for the mechanics.

KPMG also flags that the Corporate Alternative Minimum Tax (CAMT), enacted under the Inflation Reduction Act, is affected by the OBBBA. Large corporations subject to CAMT need to model how the OBBBA's bonus depreciation permanence and rate changes interact with their CAMT exposure before finalizing their Q3 2025 tax provision.

Section 163(j): Interest Deductibility Restored

The OBBBA modifies Section 163(j) interest deductibility rules, restoring EBITDA-based adjusted taxable income (ATI) for 2025 and closing the capitalized interest bypass from 2026. Finrep's Section 163(j) Q2 2026 analysis covers the multi-year planning and disclosure consequences in detail.

Clean Energy Credits: Curtailed, Not Eliminated

The OBBBA phases out or curtails several Inflation Reduction Act clean energy credits, but the picture is more nuanced than a blanket repeal. The most concrete change: IRS Notice 2025-42 eliminates the 5% safe harbor for wind and solar project construction, replacing it with a requirement that physical work must actually begin. Developers and investors who relied on the safe harbor for IRA tax credit qualification need to reassess their project timelines.

Transportation and utilities face the most significant challenges from the clean energy changes. Agriculture, mining, and construction, by contrast, could see tax reductions of up to 27% under the OBBBA, driven by bonus depreciation and other business provisions.

For companies holding transferable tax credits, see Finrep's analysis of FASB's ASC 740 ruling on nonrefundable transferable credits.

REIT-Specific Changes

REIT finance teams have two provisions to update immediately:

1. TRS asset test raised from 20% to 25% of total REIT asset value, effective for taxable years after December 31, 2025. This gives REITs more flexibility in their taxable REIT subsidiary structures.
2. The 20% deduction for ordinary REIT dividends received by individual stockholders is now permanent, locking in the 29.6% effective maximum marginal rate on ordinary REIT dividends.

Prospectus supplements and investor communications should be updated to reflect both changes.

Effective Dates: Not Everything Is July 4, 2025

One of the most common compliance errors companies are making is treating July 4, 2025 as the universal effective date. It isn't. Different provisions have different effective dates:

Applying a single enactment date to all provisions will produce incorrect deferred tax calculations. Each provision's effective date governs when the related deferred tax asset or liability is remeasured.

New Provisions Worth Knowing: Trump Accounts and HSA Expansion

Two provisions have employer-side implications that finance and HR teams should flag:

Trump Accounts (Section 70204): Tax-advantaged savings accounts for children, funded by the federal government with a one-time $1,000 contribution per eligible child. Individual annual contributions are capped at $5,000; employers may contribute up to $2,500 per year toward an employee's or dependent's Trump Account. Employer contributions are generally deductible and excluded from employees' taxable income. Accounts cannot be funded before July 4, 2026, and after the child turns 18, the account is treated like a traditional IRA. As of early 2026, 4 million children have been signed up, with 1 million claiming the $1,000 pilot contribution.

HSA expansion (Section 71307): Starting January 1, 2026, bronze and catastrophic health plans are treated as HSA-compatible, expanding eligibility for HSA contributions. Telehealth services can be received before meeting the HDHP deductible permanently for plan years starting on or after January 1, 2025.

What IRS and Treasury Guidance Is Still Pending?

As of mid-2026, the IRS has issued multiple rounds of OBBBA guidance, including proposed regulations on Trump Accounts (IR-2026-31, IR-2026-33) and safe harbor guidance (IR-2026-80). But several provisions remain subject to further rulemaking:

• NCTI/GILTI rate and structure regulations
• FDII deduction mechanics under the new rules
• BEAT modifications and CAMT interaction
• Section 163(j) EBITDA restoration technical guidance
• Clean energy credit transition rules post-Notice 2025-42

For tax provision purposes, the key question is whether a company can recognize the benefit of a provision now or must wait for guidance. Where IRS regulations are required to apply a provision, recognizing the full benefit before that guidance issues carries audit risk. Document your position and disclose the uncertainty.

FAQ

What does OBBBA stand for? One Big Beautiful Bill Act. It's also referred to as H.R. 1 or P.L. 119-21. The official short title was removed during the Senate amendment process, so the law technically has no formal short title.

When was the OBBBA passed and signed? The Senate passed it 51-50 on July 1, 2025. The House agreed to the Senate amendment 218-214 on July 3, 2025. President Trump signed it on July 4, 2025.

In which quarter do calendar-year companies recognize OBBBA tax effects? Q3 2025 (the quarter ending September 30, 2025), under ASC 740-10-45-15. Q2 2025 filers disclose it as a subsequent event under ASC 855 but do not remeasure deferred tax balances until Q3.

What is the standard deduction under the OBBBA? For tax year 2025: $15,750 for single filers, $23,625 for head of household, and $31,500 for married filing jointly. These amounts are indexed for inflation going forward.

What did the OBBBA do to GILTI? GILTI was renamed and restructured as NCTI (Net CFC Tested Income). The rate and structure changed, QBAI is eliminated, and multinationals need to update their ASC 740 rate reconciliation and footnote disclosures. See Finrep's NCTI disclosure guide for specifics.

What is in the OBBBA for seniors? A temporary additional deduction of $6,000 for taxpayers age 65 and older, available for tax years 2025 through 2028. It phases out for modified AGI above $75,000 (single) or $150,000 (joint) and requires a Social Security number valid for work.

Did the OBBBA eliminate IRA clean energy credits? No, but it curtailed several. The most significant change is the elimination of the 5% safe harbor for wind and solar construction (per IRS Notice 2025-42), replaced by a physical work commencement requirement. Other IRA credits were phased out or modified. Transition rules vary by credit.

The OBBBA is a multi-year compliance project, not a one-time filing update. IRS and Treasury guidance will continue to refine how provisions apply, and companies that document their positions carefully now will be better placed when auditors and regulators review their Q3 2025 and full-year 2025 tax provisions.