Tax

On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (OBBB) into law following its passage through the budget reconciliation process on a party-line vote. The sweeping legislation represents one of the largest overhauls of federal tax policy since the 2017 Tax Cut and Jobs Act (TCJA), with major implications for businesses across the nation – including those in the recycled materials industry.  

Throughout the bill’s development, the Recycled Materials Association (ReMA) remained actively engaged with Congress – both alone as an Association, and alongside with other groups including the National Association of Manufacturers – to advocate for provisions that promoted long-term economic growth, domestic manufacturing, and private sector investment. Our efforts were guided by a clear mission – to ensure tax policy supports capital intensive sectors like ours, one that supplies nearly 40% of raw materials used in manufacturing processes and drives innovation, job creation, and supply chain resilience.

The OBBB delivers on that front, preserving and strengthening key tax provisions that create certainty for businesses, incentivize modernization and equipment investment, and reward innovation. The changes provide a more stable, and pro-investment tax framework for recyclers.  

Most notably, the law includes the following provisions that will impact business operations and decision making:  

• Deduction for Qualified Business Income (Section 199A): The Qualified Business Income (QBI) deduction, introduced by the Tax Cuts and Jobs Act (TCJA), has been a major tax benefit for owners of pass-through businesses like sole proprietorships, partnerships, and S corporations. The QBI deduction allows eligible non-corporate taxpayers to deduct up to 20% of their qualified business income. The deduction was previously set to expire at the end of 2025, but the OBBB makes the deduction permanent.   
• Asset Expensing (Section 179): A Section 179 dedication may be allowed for investment in qualified equipment and other assets subject to limitations. The OBBB increases the maximum amount a taxpayer may expense to $2.5 million from $1 million, reduced by the amount by which the cost of the property exceeds $4 million. 
• Full Expensing for Qualified Production Property – Section 168(n): A new temporary provision, the OBBB allows for the full expensing – equal to 100 percent of the adjusted basis of qualified production property. Under that provision, qualified production property means nonresidential real property used as an integral part of a domestic qualified production activity.  A qualified production activity includes the manufacturing, production, or refining of a qualified product that results in a substantial transformation of the property comprising the product. Qualified production property does not include the portion of any nonresidential real property used for offices, administrative services, lodging, parking, sales activities, software development or engineering activities, or other functions unrelated to the manufacturing, production, or refining of tangible personal property. This applies to qualified production property placed in service in the U.S. or its possessions before January 1, 2031, the construction of which begins after January 19, 2025. 
• Bonus Depreciation – Section 168(k): The law permanently extends 100 percent bonus depreciation for qualified property acquired and placed in service after January 19, 2025 and includes an additional first year depreciation deduction for manufacturing, production, and refining property. This provision was initially included in the TCJA but was scheduled to phase out over the next few years. Instead of having to spread depreciation deductions for capital equipment over several years under Modified Accelerated Cost Recovery System (MACRs) rules, you can deduct the full amount of your investment in the first year. The tax provision allows businesses to pay less on their taxes for certain kinds of newly acquired property, like vehicles, encouraging investment by improving cash flow for businesses putting qualifying equipment into service. This provision was initially included in the TCJA but was scheduled to phase out over the next few years.  
• EBITDA-Based Depreciation Limits are Reinstated and Made Permanent: The TCJA previously limited interest deductions to 30% of earnings before interest and taxes (EBIT). The OBBBA reverts this calculation to earnings before interest, taxes, depreciations, and amortization (EBITDA), effective in 2025. This will allow qualifying businesses to back depreciation and amortization out of their income calculations, potentially allowing them to deduct more interest. This change is permanent and aims to provide greater flexibility for businesses with significant depreciation and amortization expenses. This particular provision will especially benefit capital-intensive industries, like the recycled materials industry, that finance a lot of equipment. 
• Research and Development Tax Benefits: The OBBB revises current law that requires domestic research and development (R&D) expenditures to be capitalized and amortized over five years, and instead offers taxpayers increased flexibility. It restores full expensing by adding new section 174A and provides increased flexibility. For domestic R&D expenses incurred in tax years beginning after December 31, 2024, taxpayers can elect to (1) immediately deduct R&D costs in the year incurred, or (2) capitalize and amortize costs over the useful life of the research (not less than 60 months). However, current law treatment of foreign R&D costs (capitalization and amortization over 15 years) is not changed. In addition to expenses and capitalization, there are also favorable tax credits for qualifying R&D activities and small businesses. These include allowing businesses to claim a larger credit for qualifying R&D activities, which now includes a broader definition of eligible expenses, such as software development and certain types of engineering and design work. The OBBB also allows small businesses and startups to receive refundable credits, meaning companies can receive cash returns even if they have not yet generated taxable income. 
• Employee Benefits: The law also contains several provisions related to employee benefits including: the expansion of paid family and medical leave tax credits, a permanent increase of the credit for employer-provided childcare, and new Affordable Care Act (ACA) provisions that will require employers to implement more robust procedures for verifying employee eligibility for employer-sponsored health insurances.  
• International Provisions: The law permanently increases the Base Erosion Minimum Tax, reduces the global intangible low-taxed income (GILTI) deduction, expands the foreign-derived intangible income (FDII) deduction, and makes permanent the extension of the look-thru rule for controlled foreign corporations. 

A comprehensive overview of the OBBB can be found here. ReMA will continue to track OBBB implementation and share any IRS interpretation or guidance that is released.