The One Big Beautiful Bill Act (OBBBA) was passed on July 4, 2025, to jumpstart the Trump administration’s sweeping economic agenda.
The President wanted “one big beautiful bill” to execute on an economic vision that carries forward many critical tax cuts from his first term, and by all accounts, he succeeded. With the passing of OBBBA comes a few key changes to the tax code for individuals and business owners alike.
Since you likely do not have the time to read the 1,000+ pages of the bill, we’ve summarized the key points business owners need to be aware of and the advantages below. Read through them and see how you can take advantage of these changes to maximize your income and reduce your tax burden.
What is OBBBA?
The One Big Beautiful Bill Act (OBBBA), passed in July 2025, is the core of President Trump’s economic agenda to kick off his second term.
The bill covers changes to:
- The tax code and tax cuts.
- Tax rules and exemptions for businesses.
- Tax credits – both new ones and the elimination of some.
Perhaps most notably, the bill continues what the president began in his first term by making the individual tax cuts passed in 2017 permanent and making the 20% QBI deduction permanent. The latter one is key for businesses: if your business is a pass-through entity, you can deduct up to 20% of qualified business income from your taxes (more on this later).
Key Tax Changes for Individuals
The bill doesn’t just benefit business owners (though you’ll see below that there are many key advantages for them); it also includes a few key changes that affect individuals, too.
Most notably, these are:
- A permanent extension of the tax cuts from President Trump’s first administration.
- A change to shift the tax brackets upwards with inflation, which may result in minor tax savings.
- An expansion of child tax credits to a maximum of $2,200, along with a $1,700 refundable credit and a $500 dependent credit.
- Deductions of up to $25,000 for annual income from tips and up to $12,500 for qualified overtime compensation.
- Taxpayers over 65 receive a temporary additional deduction from 2025 through 2028. The deduction is $6,000 for single taxpayers and $12,000 for married couples, in addition to the regular standard deduction and the existing extra deduction for age. This bonus deduction is subject to a Modified Adjusted Gross Income (MAGI) phase-out, starting at $75,000 for single filers and $150,000 for joint filers.
- The phaseout threshold for AMT exemption is increased, offering relief to more middle- and upper-middle-income taxpayers.
High-earning W-2 employees often lack the advantages business owners get to lower their tax burden, but some of these changes can provide relief. There are substantial benefits for business owners through OBBBA that we’ll explore next.
Key Tax Changes and Credits for Businesses
Beyond extending the 2017 tax cuts, business owners gain additional advantages under OBBBA. The top six we recommend paying attention to are:
- 100% bonus depreciation
- Section 179 Equipment Expensing
- Qualified Business Income Deduction
- Research and development credits
- Capping the corporate tax rate
- QSBS changes for C-Corps on Exiting
As we’ll show, each of these can lead to substantial tax savings if implemented correctly in your business.
100% Bonus Depreciation
OBBBA permanently restores 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025.
That means business owners can immediately deduct the full cost of qualifying assets, like:
- Machinery
- Equipment
- Certain vehicles
- Computers
- Office furniture
- Land improvements
And you get to deduct in the year they are acquired rather than spread the deduction over multiple years. The change to bonus depreciation gives you a massive cash flow advantage by front-loading tax deductions and reducing your current-year tax liability, allowing you to space out large expenses to offset taxable income strategically.
Section 179 Equipment Expensing
Section 179 allows businesses to immediately expense the full purchase price of qualifying equipment and software. While it overlaps with bonus depreciation, it has distinct advantages that business owners should be aware of.
OBBBA raises the Section 179 deduction limit from $1.25 million to $2.5 million, with a new phaseout threshold of $4 million, effective for property placed in service in tax years beginning after December 31, 2024. Section 179 is particularly valuable because certain states don’t allow bonus depreciation but may permit Section 179 expensing.
The deduction is limited by taxable income – you can’t use it to create a net loss – making it a strategic tool for profitable businesses. When both provisions are available, tax strategy typically involves applying Section 179 first, then using bonus depreciation for remaining qualified assets.
Qualified Business Income Deduction
As shared above, OBBBA makes the 20% Qualified Business Income (QBI) deduction permanent for pass-through entities, including partnerships, S corporations, and sole proprietorships, eliminating the previous 2025 expiration date.
The QBI deduction reduces your taxable income after calculating your business income, potentially saving pass-through business owners up to 20% of their qualified business income in federal taxes.
If your business is a “specified service trade or business,” such as a lawyer, doctor, consultant, financial planner, or accountant, then the deduction may be limited or eliminated, should your income reach a certain limit. As of 2025, the SSTB deduction limitations are phased out when the owner’s taxable income exceeds $394,600 for married filing jointly and $197,300 for other filers. No deduction is permitted when taxable income exceeds $494,600 for married filing jointly and $247,300 for other filers in 2025.
For any business that is not an SSTB and where the owner’s taxable income surpasses the established thresholds, the QBI deduction for each trade or business could be partially or fully reduced to the higher of either of the following:
- Half (50%) of the W-2 wages that are paid by the trade or business.
- One-quarter (25%) of the W-2 wages, combined with 2.5% of the unadjusted basis immediately after acquisition (UBIA) of qualified property. Qualified property refers to any tangible property associated with a specific trade or business.
If you qualify, QBI deductions can offer substantial tax savings and are not to be missed.
Research and Development Credits
OBBBA also permanently reinstates immediate expensing for domestic research and development expenses through new Section 174A, effective for tax years beginning after December 31, 2024, reversing the TCJA requirement that forced businesses to capitalize and amortize R&D costs over five years.
This has immediate cash flow implications: you can now deduct the full amount of qualifying domestic R&D expenses in the year incurred rather than spreading deductions over five years. That said, you must either claim the full R&D credit and reduce your R&D expense deduction by the credit amount, or elect to take a reduced R&D credit with no adjustment to the deduction.
Corporate Tax Rate
OBBBA retains the 21% corporate tax rate for C corporations, which was already made permanent in the Tax Cuts and Jobs Act and does not sunset.
While C-Corps are double-taxed (once at the corporate level and again when profits are distributed to shareholders as dividends), this 21% rate is among the lowest in developed countries, giving the United States a competitive advantage for starting a business. While C-Corps often face a disadvantage because they are taxed as entities, this softens the blow by locking in a lower corporate tax rate.
QSBS Changes for C-Corps on Exiting
As mentioned above, because they are double-taxed, C-Corps are often seen as having a distinct tax disadvantage relative to S-Corps or other pass-through entities; however, the Qualified Small Business Stock (QSBS) change gives C-Corps an extra advantage.
The change raises the tax-free gain cap to $15,000,000 for qualifying C-Corp businesses that issue stock, up from the previous $10,000,000 threshold. It also introduces a graduated holding period requirement:
- 3 years of holding qualifies for a 50% exclusion
- 4 years of holding qualifies for 75%
- 5 years is still required for the 100% exclusion.
Additionally, more small businesses are eligible, with the asset cap lifted to $75 million from $50 million, which could also make the option applicable to companies that weren’t previously eligible. If you’re considering an exit, then this is a major tax-efficiency boost and will allow you to keep more money in your pocket after selling if you qualify.
How to Leverage OBBBA for Long-Term Growth and Tax Savings
It’s one thing to have a list of benefits presented to you, and another to take advantage of them and reduce your tax burden. Here are three steps that you can take to leverage the changes from OBBBA:
- Strategically plan capital investments and cash flow
- Structure your entity the right way
- Work with a qualified tax strategist
Strategically Plan Capital Investments and Cash Flow
You can take advantage of the changes to bonus depreciation by strategically timing equipment purchases and business investments.
This could mean:
- Equipment purchases
- Software systems
- Office space
Or other large expenses that qualify. This means that a $100,000 equipment purchase now results in a $100,000 deduction in year one, rather than spreading it over several years, freeing up cash for reinvestment. Paying attention to your cash flow and expenses can help you invest in the business while strategically reducing taxable income, thereby lowering your tax bill.
Structure Your Entity the Right Way
OBBBA won’t affect every business entity the same way; it’s important to set your business up to maximize your tax efficiency and income.
That means maximizing tax efficiency on your income during ownership and at exit if you plan to sell the business. For example, pass-through entities like S-Corps, LLCs, and Partnerships can optimize QBI deductions, while C-Corps have a few key advantages when exiting. The structure you choose can have serious tax implications, though, so check out our guide to choosing the optimal and most tax-efficient business structure.
Work With a Qualified Tax Strategist
Most business owners we speak to know they’re paying too much in taxes, but they don’t realize there are ways to cut up to $50,000 or more from their tax bill. All you need is a strategic approach to your business and compensation.
That means taking a look at your:
- Compensation
- Exit strategy
- Charitable giving
- Investment strategy
- Retirement saving
If you’re overpaying on your taxes, it’s not because your CPA is withholding information from you – it’s because your CPA is focused on filing your forms correctly rather than thinking strategically about your financial plan.
That’s why we’re offering a no-cost evaluation to assess your tax situation. We partner with the best tax advisory firms across the country who can identify your best areas of opportunity in as little as a free 45-minute call.
Click the button below and schedule a call to see how you can retain more of your earnings and grow your wealth.
All of the above tax information is for information purposes only and is provided to explain the basic tax treatment based on the Internal Revenue Code. Any individual or entity considering any tax strategies should consult with their own CPA or tax/legal advisor who understands their particular tax circumstances and the rules governing their state. In no way is this information intended to be tax or legal advice.
