The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, introduced sweeping changes to U.S. tax laws. Among its most impactful provisions are:
- Restoration of 100% bonus depreciation for qualifying asset purchases
- Immediate deductibility of domestic R&D expenditures
- Higher Section 163(j) interest deduction limits
- Adjustments to GILTI, FDII, and BEAT regimes 1
These changes are expected to significantly affect corporate tax planning, deferred tax accounting, and future earnings projections. However, for financial statements ending before July 4, 2025, the effects of the OBBBA are not recognized in the financials themselves but must be disclosed as a subsequent event. Pinion advisors provide tips on how to account for changes in statements issued prior to July 4:
What to Include in Your Post-Enactment Footnotes
Entities must not reflect the tax effects of the OBBBA in financial statements for periods ending before July 4, 2025; however, if the financial statements are issued after July 4, 2025, entities should disclose the enactment of the law and its expected impact as a subsequent event.
Disclosures should include:
- A description of the law and its key provisions
- Management’s preliminary assessment of the law’s impact
- Any expected changes to deferred tax assets/liabilities
- The anticipated effect on valuation allowances
- A statement on state conformity, if applicable
Following is a footnote disclosure example for financial statements that ended before July 4, 2025, but were issued afterward, to illustrate how this information might be disclosed in the footnotes:
Sample Footnote Disclosure
Subsequent Tax Law Change – “One Big Beautiful Bill Act”
On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was signed into law, enacting significant changes to U.S. tax regulations. Key provisions of the OBBBA include the restoration of 100% bonus depreciation on qualifying asset purchases and a return to immediate deductibility of domestic R&D expenditures. Because the law was enacted after (date of your period ended financials), 2024/2025, the effects of these changes are not reflected in the period ended financial statements. The Company will re-measure its deferred tax assets and liabilities in fiscal 2025 to account for the new law.
Management has evaluated OBBBA’s provisions and expects a(n) increase/reduction in the Company’s net deferred tax asset/liability in 2025, primarily due to _____. (An example here would be “the ability to expense assets and R&D costs faster for tax purposes.” For example, had the OBBBA been in effect in 2024, an additional [$XXX] of the Company’s year-end equipment balance would have been immediately deductible for tax, which would have increased deferred tax liabilities by approximately [$XXX] (at the 21% federal rate) and reduced 2025 tax expense correspondingly.) This change, along with others (such as a higher Section 163(j) interest deduction limit), will be recognized as a discrete income tax benefit in 2025 when the law’s impact is recorded. As of the date of these financial statements, [state] has not conformed to any provisions of the Act, and any potential impact of future conformity has not been estimated.
The Company’s valuation allowance will also be re-evaluated considering the new law’s effects on future taxable income. Management’s preliminary view is that no material increase in the valuation allowance will be necessary as OBBBA is expected to stimulate taxable income in the long run (through faster depreciation and R&D write-offs that improve future earnings).
Need help navigating tax laws or preparing your disclosures? Get in touch with a Pinion financial institutions advisor.
