The One Big Beautiful Bill Act (OBBB) was signed into law on July 4, 2025, providing significant tax reform and updates to current tax law that should significantly benefit the U.S. trucking industry.
Many of the provisions that were scheduled to expire at the end of 2025 have now been made permanent. With provisions aimed at boosting capital investment, easing financing burdens, and assisting families in passing on their businesses through an increased estate tax exemption, the OBBB provides multiple avenues for taxpayer-friendly planning opportunities for trucking firms while also leaving a major question mark related to driver overtime pay.
No Tax on Overtime Pay?
OBBB provides the ability for employees to deduct up to $12,500 of overtime pay yearly through December 31, 2028. Taxpayers earning less than $150,000 ($300,000 filing joint) a year are eligible for the deduction. If a taxpayer’s income threshold exceeds the proscribed amounts, the deduction will begin to phase out.
Unfortunately, this provision may not in fact provide relief to many truck drivers due to the Motor Carrier Exemption of the 1938 Fair Labor Standards Act, which exempts drivers from the overtime pay rules. However, Schneider Downs and our partners are analyzing the potential impacts of this provision, since we know that drivers will want to understand the personal impact of this provision, and if over-road drivers are not eligible, employers will likely want to provide an explanation to their employees.
We also understand that many transportation companies are concerned about the possibility of drivers exploring opportunities at other organizations that are eligible to pay drivers for overtime. We will continue to monitor the situation related to overtime pay and provide additional insight as the dust settles.
Section 199A: Boost for S Corps and Partnerships
OBBB makes the Qualified Business Income (QBI) deduction under Section 199A permanent at the 20% deduction rate. This provision will add certainty to tax planning for independent owner-operators and owners structured as pass-through entities, effectively permanently reducing their Federal tax rate and improving after-tax income.
Bonus Depreciation: 100% Write-Offs Extended
A major win for the trucking industry is the permanent restoration of 100% bonus depreciation for qualified property, including trucks and trailers. This provision will allow businesses to immediately deduct the full cost of new equipment and other assets purchased after January 19, 2025, which could encourage investment in cleaner, more-efficient vehicles and reduce upfront capital costs.
Section 174: R&D Deductibility Restored
OBBB reinstates the immediate deductibility of research and development (R&D) expenses incurred under Section 174 permanently for expenses incurred after December 31, 2024. To be fully deductible, the expenses must be incurred in the United States. Expenses incurred outside of the United States must still be amortized over 15 years. For trucking companies investing in logistics technology, route optimization software or alternative fuel systems, this change restores the full benefit of R&D spending. Careful consideration should be taken in determining the best option for receiving the tax benefit related to any unamortized Section 174 costs, since the bill provides options depending on the size of your business.
Section 163(j): Interest Deduction Relief
The definition of adjusted taxable income under Section 163(j) permanently reverts to an EBITDA-based calculation (earnings before interest, taxes, depreciation and amortization) for tax years beginning after December 31, 2024. This change increases the amount of deductible business interest, benefiting capital-intensive trucking firms that rely on financing for fleet expansion or infrastructure development. Estate and Gift Tax Exemption: Planning for the Future
OBBB also permanently raises the estate and gift tax exemption to $15,000,000 for a single individual and up to $30,000,000 for joint filers. This will allow family-owned trucking businesses to transfer more wealth without triggering federal estate taxes. This supports generational continuity and succession planning, a critical issue for many mid-sized trucking firms.
Form 1099 Reporting Threshold
OBBB increases the threshold for information reporting requiring Form 1099 for certain payments to people engaged in a trade or business and payments for renumeration for services to $2,000 in a calendar year. This is up from $600 and will be indexed for inflation in the future for calendar years after 2026.
Conclusion
With these provisions, OBBB delivers targeted relief and long-term incentives for the trucking industry. OBBB resolves the sunsetting of many of provisions of the 2017 Tax Cuts and Jobs Act and should provide the trucking industry with the opportunity for growth and innovation into the future. The actual impact of “No Tax on Overtime Pay” is still not determined, but we will pass along additional information when it becomes available. Reach out to any members of our Schneider Downs Transportation Team with any questions!
This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center.
For more information on the impact of the OBBB on your company, please contact us at [email protected].
