Breaking Down the OBBBA: Tax Law Updates for Breweries and Distilleries

Breaking Down the OBBBA: Tax Law Updates for Breweries and Distilleries

The widely discussed One Big Beautiful Bill, officially signed into law earlier this month, extends many provisions of the Tax Cuts and Jobs Act of 2017 and imposes several new tax and spending policies. The bill’s policies affect nearly every sector of the U.S. economy, impacting individuals, businesses, and organizations in various ways. In general, the bill’s provisions are favorable for many U.S. businesses, extending and creating various business tax incentives, increasing access to capital, and encouraging investment and development. For the purposes of this article, we will explore the provisions of the OBBBA most pertinent to brewers, distillers, and distributors.

Please note that the following are federal provisions, and may apply differently depending on the state in which you operate.

Bonus Depreciation

The OBBBA makes permanent 100% bonus depreciation for qualified property placed in service as of January 19, 2025, reversing the planned phase-down of bonus depreciation. This provision will benefit brewers and distillers investing in new capital equipment, allowing these purchases to be written off immediately.

Depreciation for Qualified Production Property

The OBBBA introduces an elective additional first-year 100% depreciation deduction for “qualified production property,” that is, nonresidential real property used in manufacturing or production activities.

Increased Section 179 Deduction

The Section 179 deduction allows businesses to deduct the full cost of qualifying equipment in the year it is placed into service. The OBBBA increases the Section 179 expensing limit to $2.5 million. This limit is reduced by the amount by which the cost of qualifying property exceeds $4 million (new phasedown threshold).

QBI Deduction

The OBBBA permanently extends the Qualified Business Income (QBI) deduction. This deduction allows eligible taxpayers to deduct up to 20% of their qualified business income. The permanent extension includes additional modifications that expand the phase-in range of the wage and investment limitation and introduce a minimum deduction for businesses in which the taxpayer materially participates.

Immediate R&D Deductions Restored

Among the provisions of the OBBBA are changes to the tax treatment of research and development expenses, designed to encourage domestic research activity. U.S. research and development expenditures, previously required to be amortized over five years, can now be deducted in the year paid. Small businesses averaging $31 million or less in annual gross receipts may elect to apply the change retroactively for tax years beginning after December 31, 2021. All businesses that made domestic R&D expenditures between 2022-2024 may elect to accelerate the remaining deductions for those expenditures over one or two years. Unlike domestic expenditures, foreign R&D costs continue to require a 15‑year amortization under Section 174.

This provision will benefit brewers and distillers investing in research and development activities such as developing new flavors, experimenting with new ingredients, or exploring new production processes.

Removal of Clean Energy Incentives

The OBBBA terminates, phases out, or curtails many clean energy tax incentives, including the energy-efficient commercial buildings deduction, the commercial clean vehicle credit, and certain credits for wind and solar investments.

More to Come

Overall, the One Big Beautiful Bill Act presents expanded opportunities for breweries and distilleries to save on taxes, invest in new equipment, and innovate their products and/or processes. RBT CPAs will continue to provide updated information to our clients as more detailed guidance on the OBBBA is issued. In the meantime, if you have questions regarding the recent tax law changes, please don’t hesitate to reach out to our experts at RBT CPAs. And as always, RBT CPAs is here to support all of your accounting, audit, tax, and advisory needs. Get in touch with us today to find out how we can be Remarkably Better Together.

Will the Budget Reconciliation Bill Impact Affordable Housing in the U.S.?

Will the Budget Reconciliation Bill Impact Affordable Housing in the U.S.?

The budget reconciliation bill, known as the One Big Beautiful Bill Act (OBBBA), after being passed by the Senate and House, was signed into law by the president on July 4. This expansive piece of legislation introduces significant changes to existing tax and spending policies, impacting a wide range of government departments and funding sources. This article addresses some of the changes under the OBBBA relevant to the affordable housing space, as well as some policies that remain unchanged for now.

GRRP Funds Rescinded

The OBBBA rescinds all unobligated funding appropriated to the Green and Resilient Retrofit Program (GRRP). The GRRP is a program administered by HUD and funded by the Inflation Reduction Act (IRA), designed to improve the energy efficiency, water efficiency, and climate resilience of HUD-assisted multifamily properties. The program provided funding to owners of HUD-assisted multifamily housing for investments in green technologies, climate resilience strategies, and energy-efficient projects. The elimination of the GRRP may disrupt previously planned projects and may add strain to PHA budgets due to potentially higher energy costs.

Expansion of Low-Income Housing Tax Credit (LIHTC)

The OBBBA permanently increases allocations for 9% LIHTC by 12%, and also permanently reduces the private activity bond financing requirement for 4% LIHTC from 50% to 25%. These changes will become effective January 1, 2026. This expansion will encourage investment in the Low-Income Housing Tax Credit program and is expected to increase the affordable rental housing supply.

Qualified Opportunity Zones and New Markets Tax Credit Made Permanent

The OBBBA makes the Opportunity Zones (OZ) tax incentive permanent, with several modifications, including a narrower definition of “low-income community” and expanded reporting requirements. Every ten years, state governors will propose new opportunity zones. The bill also includes additional incentives for rural opportunity zones. The OBBBA also makes the Sec. 45D New Markets Tax Credit (NMTC) permanent. These provisions will encourage investment and construction in economically distressed communities and rural areas.

Changes to Medicaid and SNAP

The stricter eligibility requirements and funding cuts to Medicaid and SNAP programs imposed by the OBBBA will likely impact tenants of PHAs. Reduced access to government-funded benefits will require tenants to allocate more of their income towards food and medical costs, which may make it difficult for some to afford rent. As a result, housing authorities may face heightened rent collection challenges, including increased instances of arrears, evictions, and lease violations.

What the OBBBA Has Not Changed

  1. The OBBBA does not make any cuts or structural changes to Section 8, public housing, or HUD rental assistance. While the proposed FY26 budget includes potential significant cuts to HUD, funding for these programs remains unchanged for now as the FY26 budget is yet to be finalized.
  2. The OBBBA does not impose work requirements or two-year limits on rental assistance recipients, two proposals that have been put forward in recent months.

Conclusion

While HUD programs themselves may not be significantly impacted by the passage of the One Big Beautiful Bill Act, some provisions of the new legislation will affect tenants of PHAs, as well as the wider affordable housing space. For more information about the recent tax law changes, please don’t hesitate to reach out to our experts at RBT CPAs. And as always, RBT CPAs is here to support all of your PHA’s accounting, audit, tax, and advisory needs. Contact us today to find out how we can be Remarkably Better Together.

How Does the One Big Beautiful Bill Act Impact K-12 Education?

How Does the One Big Beautiful Bill Act Impact K-12 Education?

The recently passed budget reconciliation bill, entitled the One Big Beautiful Bill Act (OBBBA), implements several new tax and spending policies and extends many policies previously set to expire. The OBBBA contains hundreds of provisions applying to individuals, businesses, and federal programs. Policies affected range from tax rates and incentives to healthcare programs to defense spending, and more. RBT CPAs has been assessing the impact of the OBBBA across the industries we serve. This article highlights some of the key provisions of the One Big Beautiful Bill Act impacting K-12 education, both directly and indirectly.

Changes to Medicaid

The OBBBA makes several significant changes to Medicaid programs, including a new requirement that able-bodied adults aged 19 to 64 enrolled in Medicaid must spend at least 80 hours per month working or participating in other qualifying activities (i.e., community service, job training, educational programs) to maintain eligibility. Certain exemptions apply, including for pregnant women, caregivers of young children, and individuals with specific qualifying medical conditions. The legislation also reduces Medicaid eligibility based on legal status. An individual’s eligibility must now also be reassessed by states at least every 6 months.

Additionally, according to estimates released by the Congressional Budget Office (CBO), the OBBBA is projected to reduce federal health spending by approximately $1 trillion over the next decade. CBO estimates that these cuts will increase the number of people without health insurance by 10 million by 2034.

Not only do many K-12 students throughout the U.S. rely on Medicaid for health insurance, but many school districts also rely on Medicaid funding to support health services for students from low-income families. The stricter eligibility requirements and funding cuts imposed by the OBBBA are expected to result in many students losing access to health insurance as well as a reduction in school-based health services.

Changes to SNAP

The new legislation also imposes steep cuts to the Supplemental Nutrition Assistance Program (SNAP), as well as stricter eligibility requirements for recipients. As a result, many families are predicted to lose access to government-funded food assistance.

Increased Child Tax Credit

The OBBBA permanently increases the Child Tax Credit (CTC) to $2,200 per qualifying child under the age of 17, effective for tax year 2025 and indexed annually for inflation. The maximum refundable portion has been raised to $1,700, also adjusted annually for inflation. At least one parent and all qualifying children must possess valid Social Security numbers in order to qualify for this credit.

Expansions to 529 Education Savings Plans

The OBBBA expands permitted uses of funds in 529 education savings plans by broadening the definition of “qualified expenses.” Beyond tuition, tax-exempt distributions from 529 savings plans can now apply to additional expenses related to enrollment in private, public, or religious elementary or secondary schools, including books, materials, testing fees, tutoring costs, dual enrollment fees, and educational therapies. The OBBBA also increases the annual limit for 529 account distributions for K-12 expenses from $10,000 to $20,000.

Federal School Voucher Program

Beginning in 2027, individual taxpayers can claim a dollar-for-dollar tax credit of up to $1,700 for gifts to qualified K-12 Scholarship Granting Organizations (SGOs) operating in states that have elected to participate. SGOs distribute these donations through scholarships for students enrolled in private schools. Many in the education space are concerned that this federal tax incentive created by the OBBBA will divert taxpayer money away from public schools to private schools.

Questions and Further Guidance on the OBBBA

The OBBBA is an expansive piece of legislation enacting many significant policy changes, several of which will impact public school districts, families, and students. Please note that IRS guidance on the new legislation is still forthcoming. RBT CPAs will continue to provide updated information to clients as more detailed guidance is issued. In the meantime, if you have questions regarding the recent tax law changes, please don’t hesitate to reach out to our experts at RBT CPAs. And as always, RBT CPAs is here to support all of your school district’s accounting, audit, tax, and advisory needs. Contact us today to find out how we can be Remarkably Better Together.