Tax insight

Impact of H.R. 1, the “One Big Beautiful Bill Act” on health industries organizations

Insight
7 minute read
July 15, 2025

What happened?

President Donald J. Trump on July 4 signed into law H.R. 1, the “One Big Beautiful Bill Act” (Act). The Act was passed by the House on July 3 by vote of 218 to 214 and by the Senate on July 1 by a vote of 51 to 50, with the tie-breaking vote of Vice President JD Vance.

Why is it relevant?

The Act contains significant tax law changes with various effective dates affecting health organizations, including some provisions with effective dates tied to the bill’s July 4 date of enactment.

Pharmaceutical & life sciences

R&D incentives enhanced: Full expensing for US-based research or experimental (R&E) expenditures reinstated under new Section 174A, with retroactive recovery options for previously capitalized costs.
Boost to domestic manufacturing: New 100% bonus depreciation for qualified production property (QPP) and permanent 100% bonus depreciation for short-lived assets supports pharma facility investments in the United States.
Increased scrutiny under global intangible low-taxed income (GILTI) regime: Effective GILTI rate increased to 14%; US research and development (R&D) expenses excluded from foreign income calculations, which may impact global tax strategies.

Medtech

Capital investment incentives: Favorable depreciation rules under Sections 168(k) and 168(n) incentivize US-based medtech manufacturing.
R&E deduction options: Elective treatment of R&D costs offers financial flexibility, particularly valuable for device innovation and pre-market activities.
Interest expense limitation reverts to earnings before interest, taxes, depreciation, and amortization (EBITDA): Could affect capital-intensive device firms relying on financing for scale-up operations.

Payers

No Affordable Care Act (ACA) subsidy extension: The expiration of ACA premium subsidies may affect enrollment trends and payer revenues over time.
Corporate Alternative Minimum Tax (CAMT) risk elevation: Reinstated and adjusted provisions (e.g., Section 162(m) aggregation rules) may increase exposure to CAMT for large payers.
Medicaid financing changes: Modifications to how states obtain federal Medicaid funds may indirectly impact managed care organizations.

Providers

Tax-exempt organizations face new excise burdens: Expansion of compensation-related excise taxes and a tiered endowment tax for private academic medical centers.
Increased reporting requirements: Enhanced disclosures around compensation and student metrics on Form 990, Return of Organization Exempt from Income Tax.
Cost pressures likely: Repeal of some Inflation Reduction Act (IRA) energy incentives and broader reductions in federal healthcare spending could contribute to long-term cost headwinds.

Action to consider 

The Act also is projected to reduce federal healthcare spending by approximately $1 trillion through FY2034 by implementing additional eligibility rules on government health plans, expanding administrative procedures around enrollment, modifying how states can obtain federal funding for Medicaid, and not extending ACA premium subsidies. See our recent report on implications across the health industry. Business leaders in the pharmaceutical, life sciences, medtech, and health services sectors will need to evaluate the potential effect of the Act on their business operations.