Tax Implications for Businesses Under OBBBA

By Andy Beck • July 24, 2025
Smart Brevity™ count: 5.5 mins…1,456 words

👋 Welcome to Big South Insights, the biweekly dispatch from Ohio River South.

The One Big Beautiful Bill Act (aka OBBBA), signed into law on July 4, 2025, carries several significant tax changes for businesses—particularly in sectors like tech, energy, and defense. For Southern companies, OBBBA locks in tax advantages for both pass-throughs and C-corps, reignites momentum for startup investment, and encourages major capital spending. But the benefits tilt toward larger, capital-intensive firms, while clean energy developers, early-stage tech, and smaller operators may find themselves at a competitive disadvantage.

Here’s what’s most relevant:

• Permanent 20% QBI Deduction. Section 199A—covering pass‑through entities—is no longer set to expire. This gives S‑corps, LLCs, and partnerships long-term planning certainty.
• Expanded QSBS Exemption. The Qualified Small Business Stock (QSBS) tax exclusion now applies to C‑corp stock with up to $75 million in assets (up from $50M). Investors now receive 50% tax-free gains after 3 years, 75% after 4, and 100% after 5—a powerful liquidity incentive.
• Restored R&D Expensing. OBBBA reverses the TCJA-era requirement to amortize R&D costs. Companies can now fully deduct qualified R&D expenditures immediately, boosting near-term innovation spending.
• Enhanced Capital Intensity Incentives. Expanded bonus depreciation and interest deductibility favor large-scale capital projects. Sectors like fossil fuels, defense contracting, and heavy manufacturing benefit more than clean energy or emerging tech, which receive limited carve-outs.

As Southern states respond—through tax conformity, incentives, or regulatory guidance—businesses will need to stay sharp. Understanding how these federal changes intersect with evolving state priorities is critical to staying competitive.

That’s where Ohio River South comes in. We combine federal policy fluency with deep Southern market expertise to help companies navigate complexity, engage proactively, and turn legislation like OBBBA into strategic advantage.

Democratic AGs sue to block HHS rule on ACA marketplaces

A coalition of 20 Democratic state attorneys general, along with Pennsylvania Governor Josh Shapiro, has filed a federal lawsuit in Massachusetts to prevent key provisions of a new Health and Human Services (HHS) rule from taking effect next month.

Illegal Southern border crossings hit lowest in decades

On July 15, Customs and Border Protection reported that illegal crossings along the U.S.–Mexico border have fallen to historic lows, with just 25,228 encounters nationwide and only 6,072 in the Southwest—an unexpected drop likely linked to intensified Trump administration enforcement. This sharp reduction may ease pressure on Texas border communities but could also affect regional industries reliant on migrant labor, such as agriculture, construction, and hospitality.

States challenge FEMA cutbacks to pre-disaster grants

A group of states, led by Washington and Massachusetts, has filed a lawsuit in federal court accusing FEMA of unlawfully ending the Building Resilient Infrastructure and Communities (BRIC) grants program. Approved by Congress in 2018, BRIC supported resilience projects across many Southern communities. The states argue FEMA exceeded its authority by cancelling the program in April and are seeking a preliminary injunction to restore funding that had already been allocated.

EPA compliance relief extended for heavy industries

On July 18, President Trump signed proclamations providing two-year regulatory relief from several Biden-era EPA rules. The exemptions cover coal-fired power plants, taconite iron-ore facilities, and certain chemical manufacturers—many located in Southern industrial zones. This move aims to ease compliance burdens for key sectors, but critics warn it could roll back pollution protections.

Federal government to release $1 B+ in after‑school funding

Following a sustained freeze of approximately $6.8 billion in K–12 education grants, the Trump administration announced on July 18 the release of over $1 billion designated for after‑school and summer programs. This release comes after bipartisan pressure from 10 Republican senators and a lawsuit filed by 24 states opposing the withholding. An internal review of the 21st Century Community Learning Centers program has concluded, and funds will now be distributed to states under newly imposed “guardrails” to comply with executive directives.

Congress approves $9B in cuts to foreign aid & public media → Reuters

• On July 17, the U.S. House voted 216–213 to pass a Trump-backed rescissions bill that slashes nearly $9 billion in previously approved funding, including $1.1 billion from the Corporation for Public Broadcasting and roughly $8 billion from foreign aid programs. The narrow vote followed the Senate’s approval the day prior, finalizing the measure and sending it to the White House.
• Supporters framed the cuts as a step toward fiscal discipline, while critics warned of major impacts on rural broadcasting and global humanitarian assistance.

Crypto bill progress nears with stablecoin framework → Reuters

• The Senate passed a bipartisan stablecoin regulatory framework in June, followed by a House push through the GENIUS Act. If enacted, these reforms could open the door to crypto integration in mainstream finance—affecting fintech hubs across the South.

Amazon to pour $10 billion into North Carolina AI infrastructure 

→ Wall Street Journal

Texas declares disaster after central Texas floods

→ Associated Press

Trump imposes 25% tariffs on Japan, South Korea 

→ Associated Press

Georgia job count surpasses 5 Million

→ Atlanta Journal Constitution

NC Tops 2025 CNBC Business Ranking Again 

→ North State Journal

Union Pacific mulls merger with Norfolk Southern 

→ Wall Street Journal

Higher energy costs ahead in Texas 

→ Houston Chronicle

Trump threatens 30% tariffs on Mexico and EU 

→ Reuters

➡️ Upcoming Events

• August 12 — Bloomberg “Business Value of AI” — Atlanta, GA
• Sept 4–5 — PTC’DC 2025: Digital Infrastructure Conference — Washington, DC
• Sept 9–11 — U.S. Chamber Global Aerospace Summit — Washington, DC

✅ Still In Session

Texas (Special Session) – July 21 to August 19, 2025

• The Legislature reconvened for a 30‑day special session beginning July 21, called by Gov. Greg Abbott to tackle a packed agenda including flood relief/preparedness, mid-decade congressional redistricting (driven by Trump-support), THC product regulation, abortion-pill and bathroom bills, property tax relief, school testing reforms, and other fiscal measures.
• Lawmakers are focusing on flood warning systems, emergency communications, and camp building codes in response to the July 4 Central Texas floods that killed over 130 people—while redistricting and social-policy legislation proceed concurrently, sparking public protests and partisan conflict.
• The redistricting proposal could threaten to tip the scales in the 2026 midterms and set off a national redistricting frenzy—proof that the South sets the agenda.

North Carolina (Regular Session) – Biennial Jan 8–July 31, 2025

• The NC General Assembly remains in session through July 31. On June 20, Gov. Josh Stein vetoed bills on permitless carry and expanded immigration detention, and the legislature lacks the votes for an override—though ongoing debate continues into July.
• In the Senate this month, lawmakers are advancing contentious climate-repeal measures targeting renewable-energy incentives and clean-air regulations—part of a broader shift in environmental policy.

July 9 – Supreme Court greenlights mass federal layoffs → Reuters

• The U.S. Supreme Court has issued an emergency order allowing the Trump administration to proceed with its plans for mass layoffs of federal workers, effectively lifting a lower court injunction that had blocked the effort under its Department of Government Efficiency (DOGE) initiative.

July 16 – U.S. exporters warn of fallout from Trump’s global tariff threats → Politico

• There is rising anxiety among U.S. exporters—including major manufacturers across the South—about looming retaliatory tariffs tied to President Trump’s renewed trade threats. The administration recently issued warning letters to more than two dozen countries, prompting several, including the European Union, to prepare retaliatory duties on up to $88 billion in American goods.
• Sectors such as chemicals and plastics, which have significant export footprints in Southern states, are particularly vulnerable.

July 17 – OBBBA’s R&D tax fix could spark billions in tech hiring across the South → The Verge

• A key provision in the One Big Beautiful Bill Act restores immediate expensing for domestic R&D—reversing a Trump-era change that had stalled tech investment. The result? Major firms now have fresh incentives to expand engineering and innovation teams, particularly in growth markets across the South.
• Analysts predict this could unleash billions in hiring and infrastructure, especially in states courting data centers, AI labs, and advanced manufacturing.

July 17 – Retail sales growth shows resilience, job market strength delays federal rate cut → Reuters

• The U.S. Census Bureau reported that retail sales rose 0.3% in June, slightly better than anticipated, while May’s sales were revised upward—signaling a durable consumer spending trend. This momentum, combined with a robust labor market, has reduced expectations for a Federal Reserve rate cut by September.

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