What the Big Beautiful Bill Means for Small Business Taxes

The recently signed "One Big Beautiful Bill Act" will have a significant impact on tax strategies and financial planning for small businesses operating in all 50 states. Here's an overview of the key provisions that entrepreneurs and small business owners should be aware of.

Key Takeaways:

• The "One Big Beautiful Bill Act" extends many key tax provisions beneficial to small businesses.

• Sec. 199A Qualified Business Income deduction is permanently extended.

• Bonus depreciation and increased Section 179 expensing limits are now permanent.

• Employers receive permanent credits for paid family and medical leave.

• Several tax credits, including employer-provided child care, have increased significantly.

Permanent Extension of QBI Deduction

One of the most critical components for small business owners is the permanent extension of the Section 199A Qualified Business Income (QBI) deduction. The deduction remains at a 20% rate, providing substantial tax relief by lowering taxable income from qualified business activities.

This provision is particularly advantageous for small business owners operating as pass-through entities, including: 

• Sole proprietorships

• Partnerships

• LLCs

• S corporations

Enhanced Depreciation and Expensing Benefits

The bill permanently extends bonus depreciation at a 100% deduction rate for qualifying property acquired after January 19, 2025. Additionally, the Section 179 expensing limit has increased significantly, allowing small businesses to immediately deduct up to $2.5 million in qualifying property expenses, further encouraging business investments.

Employer Tax Credits Expanded

Small businesses will now benefit from permanently extended employer tax credits, particularly:

• Paid Family and Medical Leave Credit: Employers can continue receiving credits for providing paid family and medical leave, incentivizing businesses to offer competitive benefit packages.

• Employer-Provided Child Care Credit: The credit percentage has increased from 25% to 40%, with a maximum credit limit now reaching up to $500,000 (or $600,000 for eligible small businesses), making it easier for businesses to support their employees and manage workforce costs.

Additional Provisions Benefiting Small Businesses

• Research & Development Expenses: Small businesses can now immediately deduct domestic R&D expenses for tax years starting after December 31, 2024.

• Opportunity Zones: Made permanent with adjustments, offering continued investment opportunities for small businesses in designated areas.

Navigating Changes and Maximizing Benefits

These new provisions offer promising opportunities for tax savings and business growth. However, optimizing these benefits requires strategic financial planning and expert guidance.

At 1-800Accountant, America’s leading virtual accounting firm, we provide affordable, tax-deductible financial solutions, including small business tax preparation and personalized business tax advisory services. Our expert CPAs, EAs, and tax professionals can help you:

• Identify and leverage applicable deductions and credits.

• Strategically plan asset purchases to maximize depreciation benefits.

• Navigate compliance complexities proactively to ensure maximum tax savings.

Next Steps for Small Business Owners

• Evaluate Your Current Tax Plan: Review your business activities to determine how these changes specifically apply to you.

• Consult with a Pro: Schedule a free 30-minute consultation with a trusted small business expert at 1-800Accountant.

• Stay Informed: Regularly check reliable sources, such as Congress.gov, for legislative updates.

Final Thoughts

The "One Big Beautiful Bill Act" offers significant tax advantages specifically designed for small businesses. Staying informed and partnering with the right financial experts will ensure you fully capitalize on these new opportunities for years to come.

Ready to navigate the new tax landscape confidently? Contact 1-800Accountant to schedule your free consultation today.