The One Big Beautiful Bill Act, signed July 4, 2025, brought the most consequential set of tax changes for small businesses in nearly a decade. Several Tax Cuts and Jobs Act provisions were made permanent, the most damaging post-2017 reversals were undone, and a handful of brand new tools were added. Here are the changes that matter most for your 2026 tax planning, in plain English.

This post is the non-construction-specific companion to our deeper OBBBA analysis. Everything here applies to any pass-through small business (S corp, partnership, LLC) or C corporation across industries: tech founders, professional services firms, retail, hospitality, healthcare, and beyond.

1. The 20 percent QBI deduction is now permanent.

Section 199A, the 20 percent qualified business income deduction for pass-through entity owners, was scheduled to expire at the end of 2025. The OBBBA made it permanent.

What this means: if your business is structured as an S corporation, partnership, or LLC, you can continue deducting up to 20 percent of your qualifying business income, indefinitely. For most owners, this preserves an effective top federal rate near 29.6 percent on pass-through earnings (versus the standard 37 percent top bracket).

The bill also added a new 400 dollar minimum deduction for owners with at least 1,000 dollars of active QBI, and raised the phase-in thresholds that limit the deduction for higher-income service businesses.

Planning point

If you spent the last 2 years restructuring around the assumed 2026 sunset of QBI, those changes may now be unnecessary. We are re-running entity-structure analyses for clients to confirm the new permanent QBI framework still favors their current setup.

2. 100 percent bonus depreciation is back, permanently.

Bonus depreciation was phasing down (40 percent in 2025, scheduled to hit zero by 2027). The OBBBA restored it to 100 percent and made that permanent for qualified property acquired and placed in service after January 19, 2025.

Practical impact: full first-year expensing of business assets like equipment, vehicles over 6,000 lbs GVWR, computers, machinery, and qualified improvement property. No phase-down deadline pressuring purchase timing.

3. Section 179 expensing limit raised to $2.5 million.

Section 179 allows businesses to expense qualifying purchases in the year of acquisition rather than depreciate over 5 or 7 years. New limits effective 2025 and forward:

For most small businesses, this functionally means you can expense any reasonable equipment investment in full, in the year it is placed in service.

4. R&D expensing restored under Section 174.

This is the change with the biggest dollar impact for many small businesses, and the one most owners do not know about. Since 2022, the 2017 TCJA had required domestic research and experimental (R&E) expenditures to be capitalized and amortized over 5 years (15 years for foreign R&D). For businesses investing in product development, software, process improvement, or technology innovation, this rule wrecked cash flow.

The OBBBA restored immediate expensing of domestic R&E for tax years beginning after December 31, 2024. For small businesses (under 31 million dollars in average gross receipts), there is a retroactive catch-up: you can amend 2022 through 2024 returns to recover the deductions that were previously stretched.

This is often the biggest dollar item

If you had any software development, product engineering, prototype work, process improvement, or technology investment in 2022, 2023, or 2024, you may be sitting on a five or six figure deduction recovery. We are routinely identifying these for clients in the first 30 days of an engagement.

5. SALT cap raised to $40,000.

The state and local tax (SALT) deduction cap was raised from 10,000 dollars to 40,000 dollars for tax years 2025 through 2029, with a 1 percent annual increase. The expanded cap phases out for taxpayers with adjusted gross income between 500,000 and 600,000 dollars. After 2029, the cap is scheduled to revert to 10,000 dollars unless extended.

For business owners in high-tax states (or with significant Georgia state income tax exposure on top of property tax), the expanded cap creates a meaningful itemized deduction during the 5-year window. Itemizing may now beat the standard deduction for many owners who switched to standard after the 2017 cap.

6. Section 163(j) interest deduction restored to EBITDA basis.

Since 2022, the business interest deduction limitation under Section 163(j) was calculated using EBIT (excluding depreciation and amortization addbacks). This significantly restricted interest deductions for businesses with debt-financed equipment. The OBBBA reverted the calculation to EBITDA, which is more generous.

For any business carrying equipment loans, term debt, or financing related to capital expenditures, this is an annual recovery of previously limited interest deductions.

7. 1099-K threshold reverted to $20,000.

The earlier plan to lower the third-party payment platform 1099-K reporting threshold to 600 dollars (impacting every small business using Venmo, PayPal, Stripe, Square) was reversed. The threshold returns to the pre-2022 rule: 1099-K only required when payments exceed both 20,000 dollars AND 200 transactions.

Important caveat: this changes only the reporting paperwork. It does NOT change the underlying obligation to report all business income on your tax return. Small businesses still must report every dollar of revenue, whether or not a 1099-K is issued.

8. Estate tax exemption raised to $15 million.

The estate and gift tax exemption is now 15 million dollars per individual, indexed annually for inflation, and made permanent. For business owners thinking about succession planning, this materially expands what can transfer to the next generation without estate tax. A married couple can shield 30 million dollars combined.

9. Opportunity Zones extended (OZ 2.0).

The Opportunity Zone program, originally part of the 2017 TCJA, has been made permanent ("OZ 2.0"). New designations effective January 1, 2027. The new structure includes a rolling 5-year deferral for capital gains invested after December 31, 2026, a 10 percent basis step-up at year 5 (30 percent for rural OZs), and a 30-year cap on gain exclusion. For business owners with capital gains to redeploy, OZ remains a powerful deferral and exclusion tool.

What to do between now and December 31.

These are not theoretical changes. They are line items on your 2026 tax return that compound year after year for as long as the provisions remain. The cost of inaction is paid annually.

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