The One Big Beautiful Bill Act was signed in July 2025, and the headlines have long since moved on. Your tax return hasn't. The law's provisions land squarely on the returns small businesses are filing for 2025 and 2026 — which means the difference between owners who plan around it and owners who hear about it in April is showing up right now, in real dollars.
Here's what matters most for a small or mid-sized business, in plain English.
01. Equipment purchases: full expensing is back for good
The act made 100% bonus depreciation permanent for qualifying equipment and property placed in service after January 19, 2025. In practice: the truck, the machine, the build-out you put to work this year can generally be written off this year, instead of depreciated over a decade. Section 179 expensing was also expanded — a cap of $2.5 million with higher phase-out thresholds — giving smaller businesses a second, more flexible path to the same outcome.
The planning angle: equipment purchases are now tax decisions, not just operational ones. The same purchase, timed into the right tax year, can change your bill meaningfully. If a major buy is on your horizon, the time to model it is before the deposit — not at filing.
02. The QBI deduction isn't expiring anymore
The 20% qualified business income deduction for pass-through businesses — most LLCs, S corporations, and partnerships — was scheduled to disappear after 2025. The act made it permanent. That removes a cloud that hung over entity planning for years, and it makes the old questions worth revisiting with fresh eyes: whether your entity type, salary levels, and distributions are still arranged to make the most of a deduction that's now here to stay.
03. Tips and overtime: new deductions for your employees
For tax years 2025 through 2028, employees can deduct qualifying tip income and overtime pay (within limits) on their own returns. For hospitality and trades businesses especially, this has a payroll-side wrinkle: those amounts have to be tracked and reported correctly for your people to claim what they're owed. Getting payroll reporting right isn't just compliance anymore — it's part of how your team gets paid.
04. Less 1099 paperwork
Starting with payments made in 2026, the reporting threshold for 1099-NEC and 1099-MISC rises from $600 to $2,000 (indexed after that). Fewer forms for the small, occasional vendors — though your bookkeeping still needs to capture every payment, because the deduction doesn't care about the form.
05. Other pieces worth a conversation
Depending on your situation: domestic research and development costs are once again immediately deductible (with catch-up options for prior years), the SALT deduction cap rose substantially for individuals through 2029 (with income phase-outs), and several clean-energy credits from prior law are winding down on accelerated schedules — relevant if solar or EVs were in your plans. Each of these is a "does this apply to me?" item — five minutes with your CPA answers it.
06. What to actually do with all this
The theme across the whole act is the same: almost every benefit rewards businesses that plan before year-end and punishes nobody except the unprepared. Concretely — model major equipment purchases before you commit; revisit entity structure and compensation now that QBI is permanent; make sure payroll is tracking tips and overtime correctly; and update your 1099 collection process for the new threshold.
This is exactly what tax planning means at our firm: quarterly projections that fold in law changes while there's still a year to steer, so the return confirms a plan instead of delivering a surprise. Tax planning should happen before tax season — this law is the current, very concrete proof.
Want to know which provisions actually move your number? Bring last year's return to one conversation — schedule a consultation.
This article summarizes federal tax law in general terms and is not tax advice for your specific situation. Provisions carry limits, phase-outs, and effective dates that depend on your facts — review yours with a qualified professional before acting.