Tax insight

State business tax considerations for H.R. 1, the “One Big Beautiful Bill Act”

Insight
5 minute read
July 18, 2025

What happened?

President Donald J. Trump on July 4 signed into law H.R. 1, the “One Big Beautiful Bill Act” (the Act). Key business tax features of the Act include permanent extension, with modifications, of provisions enacted as part of the 2017 TCJA that were set to change or expire at the end of 2025. See PwC's Insight, “President Trump signs H.R. 1, the ‘One Big Beautiful Bill Act,’” for more information.

This Insight discusses some of the major business tax changes contained in the Act and the initial state income tax considerations as of enactment due to state tax conformity.

Why is it relevant?

While many states eventually responded to the TCJA, CARES Act, and other subsequent federal legislative changes, the TCJA extensions/revisions and other business tax changes in the Act may prompt states to revisit their conformity decisions, especially for new provisions in the Internal Revenue Code (IRC, or Code) that were not previously addressed or changes in the limitation of business deductions (e.g., IRC Section 163(j), IRC Section 250).

As of July 4, most states have enacted their budgets and/or ended their legislative sessions. However, because of economic uncertainty and the anticipated effects of reductions in federal funding, several states have indicated that they may have a special session later this year to address budgetary issues. This could provide states with an opportunity to respond to the state tax impact of the federal tax changes in the Act, especially in states with “rolling” (i.e., automatic) conformity to the IRC.

See PwC’s Insight, Accounting for 2025 US tax reform, for information on accounting considerations with the Act.

Actions to consider

Businesses should analyze state conformity to the provisions in the Act that may impact state 2025 estimated payments as well as the potential reporting implications for financial statements. Businesses also should monitor state legislative actions and administrative guidance in response to the Act’s enactment, including potential actions in special legislative sessions. Modeling these tax changes on a multistate basis will be key to understanding the Act’s impact on business effective tax rates and making informed business decisions.