As the calendar turns to late January 2026, the American corporate landscape is undergoing its most significant fiscal transformation in nearly a decade. The 'One Big Beautiful Bill Act' (OBBBA), signed into law in mid-2025, has officially moved from legislative text to market-moving reality. With a staggering $285 billion stimulus injection hitting the economy this year, the act is not just a populist victory for the current administration—it is a lifeline for the nation’s most capital-intensive industries. At the heart of this shift is a technical but transformative change to Section 163(j) of the tax code: the restoration of business interest deductibility to 30% of EBITDA, up from the more restrictive 30% of EBIT.

The immediate implications are profound. For mid-sized manufacturing firms and debt-heavy infrastructure giants, the 'EBITDA pivot' effectively lowers the cost of capital overnight. By allowing companies to add back depreciation and amortization to their taxable income base, the OBBBA has essentially removed a "tax penalty" on investment that had persisted since 2022. As of January 26, 2026, CFOs across the country are re-evaluating their balance sheets, with many expected to accelerate capital expenditures (CapEx) that were previously sidelined by high interest rates and unfavorable tax treatment.

A Fourth of July Fireworks Display for the Treasury

The passage of the OBBBA, officially recorded as Public Law 119-21, followed a whirlwind legislative battle that culminated on July 4, 2025. Introduced by Representative Jodey Arrington (R-TX) as H.R. 1, the bill was the centerpiece of a rapid-fire reconciliation process. The drama peaked in the Senate, where Vice President J.D. Vance cast the tie-breaking 51st vote to secure the bill's passage over fierce opposition. While the official name was stripped during the "Byrd Rule" challenges, the "One Big Beautiful Bill" moniker has stuck in the public and market consciousness, symbolizing a return to the aggressive supply-side economics seen in the late 2010s.

The $285 billion stimulus for 2026 is bifurcated into a $150 billion consumer-facing tax refund surge and a $135 billion business-side incentive package. The latter includes the permanent restoration of 100% bonus depreciation alongside the EBIT-to-EBITDA shift. Markets reacted with a "relief rally" in the second half of 2025, but the true impact is only now becoming visible in Q1 2026 earnings guidance. The shift back to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is particularly critical because it reverses a 2022 "cliff" that had limited interest deductions to a narrower definition of profit, which had severely penalized firms with heavy machinery, large factories, or massive fiber-optic networks.

The Winners: 'Heavy Iron' and Telecom Titans

The primary beneficiaries of the OBBBA are firms where the "wedge" between EBIT and EBITDA is largest—those with significant non-cash depreciation expenses. Lumen Technologies, Inc. (NYSE: LUMN) stands out as a major winner. With a massive legacy and fiber network and a history of high leverage, Lumen had been strangled by the 30% EBIT cap as its operating margins thinned. The move back to EBITDA significantly expands its interest deduction capacity, providing crucial liquidity as it continues its fiber-to-the-home pivot. Similarly, telecom giant AT&T Inc. (NYSE: T) is expected to see a significant boost to free cash flow, as its nearly $18 billion in annual depreciation can now be used to shield its substantial interest payments from taxation.

In the industrial sector, Ford Motor Company (NYSE: F) and The Boeing Company (NYSE: BA) are poised to reap billions in tax savings. Ford’s multi-billion dollar investments in electric vehicle tooling and battery plants result in massive depreciation charges that previously "lowered" its allowed interest deductions under the EBIT rule. Now, those investments effectively increase its deduction ceiling. Mid-sized champions like Herc Holdings Inc. (NYSE: HRI) and Oshkosh Corporation (NYSE: OSK) are also seeing an immediate impact. For Herc Holdings Inc. (NYSE: HRI), a company defined by its high-value rental fleet, the ability to add back fleet depreciation to its interest cap allows for more aggressive debt-funded fleet expansion without the fear of hitting a tax wall.

Reversing the '22 Cliff: A New Era for Mid-Caps

The OBBBA’s significance extends far beyond simple tax savings; it represents a fundamental shift in U.S. industrial policy. By favoring the EBITDA standard, the government is essentially subsidizing debt-financed growth for companies that build physical things. This fits into a broader global trend of "re-shoring" and domestic manufacturing dominance. The previous EBIT-based standard was often criticized by the National Association of Manufacturers for being "anti-investment," as it effectively made borrowing more expensive for the very companies that were spending the most on new equipment and infrastructure.

The ripple effects are already being felt by regional players and infrastructure firms like MasTec, Inc. (NYSE: MTZ). As a contractor for the energy and telecom sectors, MasTec's clients now have more capital to spend on large-scale projects. Furthermore, the $285 billion stimulus acts as a buffer against the high-interest-rate environment that has defined the mid-2020s. Historically, the shift to EBIT in 2022 was seen as a "stealth tax hike" on the industrial heartland; the 2026 EBITDA restoration is viewed by many as the definitive correction of that era, placing the U.S. tax code back in alignment with international competitors who offer more generous capital recovery rules.

The Horizon: Strategic Pivots and Market Opportunities

In the short term, investors should expect a surge in corporate borrowing as mid-sized firms look to capitalize on the expanded deductibility. Strategic pivots are already underway; companies that had been focusing on debt paydown to avoid the 30% EBIT cap are now shifting toward M&A and aggressive CapEx. United Rentals, Inc. (NYSE: URI), for instance, may now find it more tax-efficient to acquire smaller competitors using debt, as the acquired depreciation will further shield the interest on the acquisition loans. This "virtuous cycle" of investment and deduction is a key pillar of the OBBBA’s long-term economic strategy.

However, challenges remain. The influx of $285 billion in stimulus during 2026 carries the risk of reigniting inflationary pressures, which could prompt the Federal Reserve to keep rates "higher for longer." If interest rates climb further, even the expanded EBITDA-based deduction may not be enough to fully offset the cost of debt for the most fragile mid-caps. The long-term success of the OBBBA will depend on whether this tax-shielded capital is used for productive domestic capacity or simply for share buybacks and executive bonuses—a point of contention that is likely to dominate the 2026 midterm election cycle.

Final Word: What to Watch in the Coming Months

The 'One Big Beautiful Bill Act' has successfully re-engineered the financial plumbing of Corporate America. By swapping EBIT for EBITDA in the 163(j) calculation and injecting a massive stimulus, the law has provided a powerful tailwind for industrials, telecoms, and infrastructure providers. The summary for investors is clear: the "tax cost" of carrying debt has plummeted for capital-intensive firms, making them some of the most attractive plays in the early 2026 market.

Moving forward, the key indicator of success will be the CapEx reports in the Q1 and Q2 2026 earnings seasons. Investors should closely monitor the debt-to-equity ratios and depreciation schedules of mid-cap industrial stocks. If companies like Oshkosh Corporation (NYSE: OSK) or MasTec, Inc. (NYSE: MTZ) show a marked increase in domestic investment alongside improved after-tax margins, it will be a sign that the OBBBA is delivering on its promise. For now, the "One Big Beautiful Bill" is the dominant force in the market, turning the technicalities of the tax code into a multi-billion dollar engine for industrial growth.

This content is intended for informational purposes only and is not financial advice.