The One Big Beautiful Bill: Key Business Tax Impacts at a Glance
The One Big Beautiful Bill Act of 2025 introduces a number of business-focused updates, including enhanced tax breaks and eased compliance burdens. From corporate tax rate adjustments to revisions in deductions, credits, and entity-level planning, this legislation will impact decision-making for companies of all sizes.
Below is a breakdown of the most important OBBB business-related tax provisions to help business owners understand what’s changing — and how to prepare.
Business Tax Law Changes
Qualified Business Income (QBI) Deduction Becomes Permanent
- The popular 20% deduction for Qualified Business Income is now permanent.
- A minimum deduction of $400 is introduced for taxpayers with at least $1,000 in QBI.
Expanded Employer-Provided Childcare Credit
- The credit rate increases to 40% of qualified childcare expenses (up from 25%).
- The maximum credit allowed rises to $500,000, up from the previous $150,000.
- Small businesses can also deduct 50% of qualified expenses, with a credit cap of $600,000.
Higher Reporting Thresholds for Form 1099
- Form 1099-NEC and Others
- The reporting threshold increases from $600 to $2,000.
- This threshold will be indexed for inflation starting in 2027.
- Form 1099-K
- The scheduled $600 threshold for 2026 has been rolled back.
- The older threshold of $20,000 and 200+ transactions is reinstated.
Research & Experimental (R&E) Expensing Returns
- Businesses can now fully deduct domestic R&E expenses.
- This change applies from January 1, 2025 through December 31, 2029.
Bonus Depreciation is Reinstated
- The 100% bonus depreciation is back for qualified property.
- Applies to property acquired and placed in service between January 19, 2025 and December 31, 2029.
Section 179 Deduction Limit Doubled
- The maximum deduction increases to $2.5 million, up from $1.25 million.
- This supports greater upfront expensing for qualifying business assets.
IRS Power Boosted on Disguised Payments for Services
- The IRS is now empowered to reclassify certain partnership distributions as payments for services.
- This can occur without the need for final regulations.
- Targets arrangements where service payments are disguised as profit distributions (typically taxed at lower capital gains rates).
Preparing Your Business for the 2026 Tax Shift
Tax changes are on the horizon for your business. Staying ahead of these updates can make a significant difference in your 2026 tax outcomes.
As always, the Alloy Silverstein advisory team is here to guide you through every phase of tax reform with proactive strategies tailored to your business goals. Contact us today to begin planning.
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