When Congress enacted the Tax Cuts and Jobs Act (TCJA) in 2017, one of the most significant benefits for business owners was the Section 199A Qualified Business Income (QBI) deduction. This deduction permits eligible taxpayers to deduct as much as 20% of their qualified business income, although it has certain limitations. This is where UBIA: Unadjusted Basis Immediately After Acquisition, plays a role.
UBIA signifies the value of qualified property at the time it is put into service, and for numerous business owners, it influences the amount of the QBI deduction they can claim. Simply put, UBIA is important because it provides some high-income taxpayers with an alternative method to calculate their deduction when wage limits could potentially reduce or eliminate it.
However, there is a challenge: many provisions of the TCJA, including the QBI deduction and the regulations surrounding UBIA, are scheduled to expire after 2025. If Congress does not intervene, UBIA may become irrelevant by 2026.
This changed when Congress enacted the One Big Beautiful Bill Act (OBBBA) in mid 2025. OBBA extended and modified several TCJA-related provisions that directly affect business owners, including restoring 100% bonus depreciation and increasing Section 179 expensing limits. Importantly, OBBA also preserved access to the QBI deduction for many pass-through businesses, which means UBIA continues to play a meaningful role after 2025.
In this article, we’ll walk you through the essentials: what UBIA is, how it currently works, how OBBBA affects the post 2025 outlook, what potential changes may still arise in 2026, and the steps business owners can take now to prepare.
Read more: UBIA in Taxes.
What is UBIA and Why Does it Matter?
UBIA, or Unadjusted Basis Immediately After Acquisition, is simply the original cost of qualified property when it’s first placed in service. This figure is important because it’s used in calculating the Section 199A Qualified Business Income (QBI) deduction limits.
For high-income taxpayers, the QBI deduction begins to phase out once certain thresholds are exceeded. That’s where UBIA comes in. Instead of relying only on wages, the law allows taxpayers to factor in 2.5% of UBIA when calculating the deduction limit.
In practice, this means businesses with significant property can still qualify for part of the deduction, even if wages alone wouldn’t be enough.
How UBIA Works with the QBI Deduction
The QBI deduction allows up to 20% of qualified business income to be deducted, but this benefit phases out once taxable income crosses certain thresholds. UBIA provides a workaround: instead of being capped by wages alone, taxpayers can factor in the value of their qualified property to maintain part of their deduction.
Who Benefits Most from UBIA?
UBIA is especially important for real estate investors, capital-intensive businesses, and high-income taxpayers. In New Jersey, where commercial real estate and equipment-heavy industries are a major part of the economy, UBIA often helps owners significantly reduce tax burdens.
What Happens to UBIA After 2025?
The big question for business owners is what happens next. As it stands, the QBI deduction and the UBIA rules tied to it are scheduled to sunset after December 31, 2025. If Congress does nothing, UBIA may no longer play a role in tax planning starting in 2026.
However, the One Big Beautiful Bill Act (OBBBA) has changed the outlook.
How OBBA Affects UBIA and QBI Going Forward:
- OBBBA restored 100% bonus depreciation, which encourages property acquisition and affects UBIA calculations.
- OBBBA increased Section 179 expensing limits, allowing more property to qualify immediately.
- OBBBA preserved continued access to the QBI deduction for many pass-through businesses, meaning UBIA retains its importance beyond 2025.
- While OBBBA extended key TCJA-era provisions, some elements may still be revisited by Congress in 2026 or beyond, so planning remains essential.
In short:
UBIA is expected to continue to matter after 2025, but the long-term rules are still subject to future legislation and IRS guidance.
How Businesses Should Prepare Now
Even with OBBBA in place, the smartest strategy is still early action. Business owners should:
- Review current deductions and ensure they are maximizing savings under the existing rules.
- Consider capital investments before 2025, since property placed in service now benefits from restored bonus depreciation and higher Section 179 limits under OBBBA.
- Evaluate ownership structures to determine if adjustments could improve eligibility.
Because regulations may continue to evolve, personalized tax planning is more important than ever.
Why Proactive Tax Planning is Essential
UBIA and the QBI deduction remain too valuable to ignore, even with OBBBA providing extended stability. Business owners who take a “wait and see” approach risk missing opportunities available now.
Learn more about Year-End Tax Planning Strategies to Minimize Your 2025 Federal Taxes.
How the Cg Team Helps Clients Navigate Uncertainty
For nearly four decades, the Cg Team has advised New Jersey businesses and individuals through changing tax laws. Their proactive approach means clients become fully equipped in being prepared ahead of time. By reviewing each client’s unique financial picture, the Cg Team tailors strategies to maximize savings today and safeguard against tomorrow’s changes.
Plan Ahead with the Cg Team
UBIA may be evolving, but the decisions you make today will shape your tax outlook for years to come. Don’t wait until future legislation is finalized to explore your options.
Contact the Cg Team today to start the conversation and get personalized guidance on how potential UBIA changes may impact your business.
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