After no small amount of drama and hand-wringing, President Trump's "One Big Beautiful Bill Act" has passed. While there is certainly a great deal of debate over the long-term ramifications and some of the provisions within the bill, one thing is for certain.
The bill includes a number of tax cuts and incentives designed to aid business owners, particularly small businesses. By making existing deductions permanent and increasing expensing limits, this bill could significantly impact how businesses plan for the future.
We say "could" because to take advantage of these fully, in the short and long term, you have to take a step back, evaluate your tax strategy, and plan accordingly. As with most changes to the tax code, to get the maximum benefit, you need to be strategic.
Here’s a closer look at what this means for you as a business owner.
1. Permanent Tax Rate Cuts: By making the individual income tax rate cuts from 2017 permanent, the bill prevents a looming tax hike for many small business owners who report their business income on personal tax returns. This stability in tax rates allows for better long-term financial planning and provides peace of mind around tax liabilities.
2. Research and Development: The "One Big Beautiful Bill" (OBBBA) significantly impacts business owners, particularly in relation to Research and Development (R&D) tax credits. It restores immediate expensing for domestic R&D expenses, allowing businesses to deduct these costs in the year they are incurred, rather than capitalizing and amortizing them over time. For small businesses, this benefit is retroactive to the end of 2021, with a grace period for those with gross receipts of $31 million or less. Additionally, the bill allows for the immediate expensing of qualifying structures, with construction starting after January 1, 2025.
3. Expanded QBI Deduction: The expansion of the Qualified Business Income deduction, coupled with the introduction of a new minimum deduction, delivers greater financial agility for eligible businesses. This enhancement not only reinforces the stability of established enterprises but also fosters entrepreneurial growth by reducing upfront financial barriers, equipping owners with the flexibility to seize new opportunities and navigate early-stage challenges with confidence.
Taken together, these provisions are designed to catalyze economic growth by delivering meaningful tax relief and targeted investment incentives. Independent analyses, including those from the Tax Foundation, suggest these measures have the potential to strengthen GDP and drive job creation across key sectors.
In summary, the “One Big Beautiful Bill Act” presents business owners with a significant opportunity to enhance their tax strategies and position their enterprises for future growth. As with any substantial legislative change, we recommend talking to our team here at C&A to fully understand how these provisions apply to your organization and to develop a customized approach that translates these opportunities into measurable benefits for your business.