M&A Implications of the One Big Beautiful Bill Act: Important Changes for Domestic and Cross-Border Transactions

On July 4, 2025, OBBBA was signed into law by President Trump. OBBBA permanently extends many provisions of the Tax Cuts and Jobs Act of 2017 that were set to expire at the end of 2025 and made several key tax reforms that will have a significant impact on M&A transactions. OBBBA is generally considered favorable for both buyers and sellers because it preserves or expands key tax provisions.

Under OBBBA, buyers will be allowed to immediately deduct 100% of qualified tangible and intangible assets through 2029, which from a buyer's perspective will enhance the appeal of an asset sale. Also, OBBBA's favorable treatment of qualified small business stock (QSBS) makes rollover equity transactions more tax efficient and thus these types of deals are likely to become more prevalent going forward. Some other notable changes impacting M&A transactions include bonus depreciation, research and development (R&D) expensing, business interest deduction, and the preservation of state pass-through entity tax regimes.

The final Act does not include the "revenge tax," which would have increased federal income tax rates on countries perceived to impose discriminatory taxes on U.S. taxpayers. Despite the omission of the revenge tax, OBBBA's provisions are less favorable for cross-border transactions. Some notable provisions that counsel and cross-border deal parties must consider are the increased scope of income for controlled foreign corporations (CFCs) that are subject to current federal income tax, the increased amount of foreign taxes that may be credited against net CFC tested income, and the termination of the requirement that interest expense and R&D expenditures be allocated against such income.

Listen as our authoritative panel discusses the important implications of OBBBA for companies contemplating a merger or acquisition and factors that deal counsel should consider when negotiating deal price, structure, and other key terms.

I. Introduction: OBBBA overview and history

II. OBBBA's implications for both domestic and cross-border M&A transactions

A. Enhanced QSBS benefits under Section 1202

B. Bonus depreciation

C. R&D expensing

D. Business interest deduction based on EBITDA

E. Temporary increase on SALT cap

F. Preservation of state pass-through entity tax regimes

G. Permanent qualified business income deduction under Section 199A

H. Relaxed limitation on deductibility of business interest under Section 163(j)

I. Other changes potentially impacting M&A

III. Notable provisions excluded from the final Act

A. Taxation of carried interest

B. Preferential capital gains tax rate

C. Revenge tax on certain foreign investors

IV. How OBBBA's tax modifications will impact deal valuation and structures

V. Best practices for guiding clients on the new requirements

The panel will review these and other key considerations:

• What OBBBA provisions impact M&A, and what opportunities and challenges do they present?
• What are the practical implications of OBBBA on domestic and cross-border M&A activity?
• What aspects of the new law and its provisions should be considered when negotiating deal price, structure, and other terms?
• How can parties contemplating a merger or acquisition take advantage of OBBBA's new tax regime?