The One Big Beautiful Bill Act (OBBBA) ushers in some of the most significant tax changes for business owners in years. From making the QBI deduction permanent to expanding bonus depreciation and raising limits on SALT deductions, the new rules open fresh opportunities—but also add layers of complexity. Here are five key tax changes every business owner should know to maximize the benefits and avoid surprises.
1.Qualified business income deduction (Section 199A)
Owners of sole proprietorships, partnerships, S corporations, and certain LLCs may be eligible for a qualified business income (QBI) deduction — also called the Section 199A deduction. The new legislation makes the QBI deduction permanent and expands eligibility.
The QBI deduction, equal to 20% of QBI, may be limited or eliminated if taxable income exceeds certain thresholds (for 2025, the threshold is $394,600 for married filing jointly and $197,300 for all other filers). Starting in 2026, the deduction phase out increases from $100,000 to $150,000 for married joint filers and from $50,000 to $75,000 for all other filers. For example, a married couple filing jointly in 2025 would generally be able to claim the full QBI deduction if the couple’s taxable income was less than $394,600; if the couple’s taxable income was between $394,600 and $494,600, the deduction would be phased out. The new expansion of the phaseout range from $100,000 to $150,000 means that the phaseout range would now be $394,600 to $544,600.
Also starting in 2026, the legislation establishes a new minimum $400 QBI deduction for those with at least $1,000 of qualified business income from businesses in which they materially participate. Both the $400 and $1,000 amounts will be indexed for inflation.
2.100% bonus depreciation
The legislation permanently allows businesses to immediately deduct 100% of the cost of new or used qualifying property — such as equipment or machinery — instead of depreciating it over time. This is available for property acquired after January 19, 2025.
3.Enhanced Section 179 expensing
Section 179 of the Internal Revenue Code (IRC) allows businesses to deduct the cost of depreciable tangible personal property, computer software, and specific improvements to non-residential buildings (including roofs, HVAC systems, and security systems) in the year of purchase.
Effective for property placed in service in 2025, the legislation doubles the maximum deduction to $2.5 million.
The maximum deduction amount is reduced when the cost of property placed in service during the year exceeds an established phaseout threshold. OBBBA increases this phaseout threshold in 2025 from $3.13 million to $4 million.
4.Qualified small business stock (QSBS)
QSBS provides tax incentives for investing in small businesses. OBBBA makes several updates for stock issued after July 4, 2025:
- The asset limit for a corporation to qualify as a small business is increased from $50 million to $75 million (adjusted for inflation).
- To qualify for 100% exclusion of gain, investors will still have to hold shares for more than five years, but there are new partial exclusions:
- 50% exclusion for shares held at least three years.
- 75% exclusion for shares held at least four years.
- The maximum excludable gain increased from $10 million to $15 million ($7.5 million if married filing separately).
Certain types of businesses are ineligible, including professional services, finance and investment services, banking, leasing, insurance, restaurants, and mining.
5.State and local tax (SALT) deduction
Since 2018, itemized deductions for state and local property taxes and state and local income taxes (or sales taxes instead of income taxes) have been capped at $10,000 ($5,000 if married and filing a separate return). This limit has presented a particular challenge for many small business owners.
The new legislation temporarily increases the cap on the state and local tax deduction to $40,000 ($20,000 if married filing separately). This cap is retroactively effective for 2025. The $40,000 will increase to $40,400 in 2026 ($20,200 if married filing separately) and by 1% for each of the following three years.
The higher $40,000 cap begins to phase out for taxpayers with modified adjusted gross income above $500,000 in 2025 ($250,000 if married filing separately). These thresholds are inflation-adjusted in later years, and the cap cannot be reduced below $10,000 ($5,000 if married filing separately).
In 2030, the cap will return to $10,000.
What’s next?
OBBBA introduces substantial, business-friendly tax changes — from making the QBI deduction permanent to boosting depreciation and QSBS incentives. Business owners should review these updates with their professional advisors to take full advantage of the opportunities.
Do you have questions about how the One Big Beautiful Bill Act may impact you—or are you looking for tax planning strategies to help keep more of what you earn?
Reach out to your Heritage Financial Wealth Manager to discuss how these changes may affect your personal financial plan.
Not yet a client? Contact us to learn more about our comprehensive financial planning process designed to help you save, grow, and preserve your wealth with purpose.
Visit our OBBBA resources page dedicated to providing insights that will help you understand OBBBA’s provisions and how they may impact your finances.
