The One Big Beautiful Bill Act, enacted on July 4, 2025, includes several changes that may affect an entity’s income tax provisions and disclosures in accordance with FASB Accounting Standards Codification Topic 740, Income Taxes (ASC 740).
Key changes to bonus depreciation, interest expense limitations, and domestic research and development expenses will likely reduce current taxable income in 2025. Additionally, modifications to meal cost deductibility and international tax rules are generally effective for tax years beginning after December 31, 2025. Due to the date of the enactment, these tax law changes will not be reflected until third quarter income tax provisions for calendar year entities.
Under ASC 740, entities should account for the changes in tax law in the period that includes the enactment date, including considering the effects of provisions that have future effective dates.
Our article, Accounting for the income tax impacts of the One Big Beautiful Bill Act, discusses some considerations for preparers and auditors related to both interim and annual financial reporting.
