Alhassane Diallo | Dec 03 2025 15:44
If you’re a small business owner, you know that tax law changes can be a headache—or a huge opportunity. The new “One Big Beautiful Bill” (2025 Act) is packed with updates that could put real money back in your pocket, streamline your paperwork, and help you plan for growth. Here’s what you need to know (and why you should be excited):
1. R&E Expensing: Innovation Gets a Green Light
Remember the days when you could immediately write off your research and experimental (R&E) costs? They’re back! Starting in 2025, you can once again fully expense domestic R&E costs in the year you incur them. No more waiting five years to recover your investment in new products or software. And if you’re a small business (average gross receipts of $31 million or less), you can even retroactively apply this rule to 2022–2024 by filing amended returns. Foreign R&E still needs to be amortized over 15 years, but for U.S.-based innovation, it’s full speed ahead.
100% Bonus Depreciation: Buy It, Write It Off—All of It!
Thinking about upgrading your equipment or vehicles? Here’s your green light: For 2024, you could only write off 60% of the cost up front. But for property placed in service after January 19, 2025, you can expense 100%—yes, the whole thing—in the first year. If you’re making purchases early in 2025 (before January 20), the rate is 40%, but after that, it’s back to full expensing for the foreseeable future.
Section 179 Expensing: Bigger Limits, More Flexibility
Section 179 just got a major upgrade. For 2025, you can expense up to $2.5 million in qualifying property (up from $1.22 million in 2024), and the phase-out threshold jumps to $4 million. Both numbers will keep pace with inflation in future years. That means more immediate write-offs and less waiting to recover your investment.
Section 163(j): More Room for Interest Deductions
If you finance your business with debt, here’s some good news: Starting in 2025, you can add back depreciation, amortization, and depletion when calculating your adjusted taxable income for the business interest deduction limit. Translation: You’ll likely be able to deduct more interest expense than under the old rules. And if you’re a small business under the gross receipts threshold, you’re still exempt from these limits.
20% QBI Deduction: Here to Stay—and More Generous
The 20% Qualified Business Income (QBI) deduction continues to be a major tax-saver for business owners, and it’s only getting better. For 2024, the phaseout starts at $191,950 for single filers and $383,900 for joint filers, with the deduction fully phased out at $241,950 and $483,900, respectively—a $50,000 or $100,000 window depending on your filing status. In 2025, these thresholds rise to $197,350 for singles and $394,600 for joint filers, with phaseouts ending at $247,350 and $494,600, giving more business owners access to the full or partial deduction. Even better, starting in 2026, the phase-in range expands to $75,000 for singles and $150,000 for joint filers, so the deduction phases out more gradually for higher earners. Plus, there’s a new safety net: if you’re actively involved in your business and have at least $1,000 in QBI, you’re guaranteed a minimum $400 deduction—even if your calculated amount is less—with both figures indexed for inflation after 2026. The bottom line? The QBI deduction is here to stay and is becoming more generous, offering even more opportunities for tax savings whether you’re just starting out or already established.
Section 1202 QSBS: Bigger Exclusions, Faster Rewards
If you’re investing in or starting a C corporation, the rules for Qualified Small Business Stock (QSBS) just got a lot sweeter. For stock issued after July 4, 2025, the maximum gain exclusion jumps from $10 million to $15 million (indexed for inflation), and the asset test rises to $75 million. Plus, you can now get a 50% exclusion after just 3 years, 75% after 4 years, and 100% after 5 years (previously, you had to wait 5 years for any exclusion at all).
1099 Reporting: Less Paperwork, More Time for Business
Tired of sending out endless 1099s? Starting with payments made in 2026, you’ll only need to issue a 1099-NEC or 1099-MISC if you pay a contractor $2,000 or more (up from $600). And this threshold will rise with inflation in future years. That’s less paperwork and more time to focus on your business.
New Deductions for Tips and Overtime: Rewarding Hard Work
For tax years 2025–2028, employees (and independent contractors) in tip-based jobs can deduct up to $25,000 in qualified tips per year, and employees can deduct up to $12,500 ($25,000 joint) in the “premium” portion of overtime pay. These deductions phase out at higher incomes and require new W-2 reporting, but they’re a great way to reward hard work in service industries.
Bottom Line
The One Big Beautiful Bill is packed with opportunities for small businesses to save on taxes, invest in growth, and simplify compliance. Now’s the time to review your strategy, update your systems, and make sure you’re ready to take advantage of these new rules.
Have questions or want to see how these changes can work for you? Reach out to our team—we’re here to help you make the most of this new era for small business!