H.R. 1 ONE BIG BEAUTIFUL BILL ACT (“OBBBA”)
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”) into law, enacting broad US tax reform that modifies and extends key provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”), adjusts certain Inflation Reduction Act incentives, and revises the endowment excise tax for higher education institutions.
FINANCIAL STATEMENT IMPACT:
Under US GAAP, tax law changes are accounted for in the period of enactment. For US federal purposes, the enactment date for US GAAP is defined as the date the US President signs the bill into law. All related tax effects of a change in tax law on existing current or deferred tax balances, including changes in valuation allowances, are recorded discretely as part of the income tax expense in continuing operations in the period of enactment.
The enactment of the OBBBA will likely have financial reporting implications for most companies with US operations. However, since the tax legislation was enacted after the June 30 balance sheet date and includes a range of effective dates for the key business provisions, we expect the majority of the tax effects to be reflected in Q3 2025 interim financial statements for many calendar yearend companies.
For many companies, OBBBA’s enactment will occur after the reporting period but before financial statements are issued. As a result, companies should follow ASC 855 guidance for nonrecognized subsequent events by disclosing the nature of the event and, if possible, the estimated financial impact or stating that such an estimate cannot be made.
STATE TAX IMPACT:
OBBBA’s enactment may also have state and local tax implications. As a result, companies will need to evaluate the conformity rules for each state to determine the state tax effect and relevant tax accounting of the recently enacted US federal tax reform legislation.
SUMMARY OF KEY PROVISIONS:
Below is a summary of the OBBBA’s key provisions for business taxpayers including a summary of the current tax law and ASC 740 tax accounting implications:
Authors:
Mark Gauthier, Partner, Tax Services
Jennifer Priplata, Partner, Tax Services
