Small Business Owner Tax Breaks Are Back
Published Wednesday, July 23, 2025
With the passing of the Tax Act of 2025, “One Big Beautiful Bill,” you, the small business owner, finally has a definitive resolution on the tax landscape for 2025 and onward. Many of the expiring provisions from the 2017 Trump-era tax bill were reinstated, many permanent and immediate, and added a few new twists.
Business Provisions
- The QBI deduction is made permanent at 20%. Additionally, for the micro small business owner, it also adds a minimum floor of $400 when there is at least $1,000 of QBI from the business.
- Companies can claim 100% bonus depreciation on property acquired on or after January 20, 2025. The 40% bonus depreciation still applies for property acquired 1/1/2025 – 1/19/2025. The 100% bonus depreciation is made permanent.
- The Sec 179 expensing amount is increased to $2.5M for 2025, phasing out if total 2025 additions are over $4M. These amounts will be indexed for inflation.
- Companies can immediately expense domestic research and development costs beginning in 2025. This expensing provision is made permanent. Additionally, small businesses (average annual gross receipts of $31M or less) can elect to claim this immediate expensing retroactively to 2022. The election must be made by July 4, 2026, via filing amended returns.
- The limitations on excess business losses are made permanent.
- Beginning in 2026, corporations can only deduct charitable contributions that exceed 1% of their taxable income. The 10% cap remains with carryovers for any excess.
Estate Tax The estate tax exclusion of $13.99M per decedent in 2025 was scheduled to revert to approximately $7M per decedent in 2026.
- The estate tax exclusion is now permanently increased to $15M per decedent in 2026, and indexed for inflation thereafter.
Increased 1099 Filing LimitsThe threshold for issuing 1099s is $600 paid to a vendor during the year. Beginning in 2026, the threshold for issuing 1099s will be $2,000.Individual Provisions
- The 2025 tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37% are permanent for 2026 and beyond. It also provides an annual adjustment to the lower two brackets.
- SALT deduction. Individuals can claim up to $40,000 of state and local taxes in 2025-2029 which is an increase from $10,000. It will then return to a $10,000 cap in 2030. There are reduction penalties when AGI exceeds $500,000.
New Tax Breaks
- Vehicle loan interest on domestic vehicles can be deducted by individuals on new auto loans paid in 2025-2028. The maximum is $10,000 and subject to reductions starting at AGI of $200,000 (joint)/$100,000 (single). You don’t have to itemize to claim the deduction. Applies to new vehicles with a final assembly in the US.
- A new deduction against tip income begins in 2025-2028. Maximum deduction is $25,000 and reduces once an individual’s adjusted gross income hits $300,000 (joint)/$150,000 (single). This deduction can be used for both itemizers and non-itemizers.
- Seniors (age 65+) can claim an additional $6,000 deduction per person for 2025 – 2028, reducing for AGI over $ 150,000 (joint).
Please consult your tax advisor about the ideal way to use these planning reminders.
