The One Big Beautiful Bill: What Small and Medium Businesses Need to Know
Monika Taylor

The One Big Beautiful Bill Act (OBBB) brings significant tax changes that could impact your business operations, employee benefits, and personal tax planning. As your trusted CPA firm, we've distilled the key provisions that matter most to small and medium-sized businesses.

 

Immediate Impacts for Your Business

Lower Tax Rates Are Now Permanent

The reduced income tax brackets from the 2017 Tax Cuts and Jobs Act are now permanent. This means predictable tax planning for you and your employees—no more worrying about rates jumping in 2026.

SALT Deduction Cap Temporarily Raised

For tax years 2025-2029, the State and Local Tax (SALT) deduction cap increases from $10,000 to $40,000 (with small annual increases). This particularly benefits business owners in high-tax states. Note: The cap phases out for higher earners ($500,000 married / $250,000 single) and reverts to $10,000 in 2030.

Green Energy Credits Ending Soon

If your business has been considering electric vehicles or energy-efficient improvements, act fast. The $7,500 EV credit ends September 30, 2025, and home energy upgrade credits expire December 31, 2025.

 

What This Means for Your Employees

Tipped Workers Get Major Relief

From 2025-2028, employees can deduct up to $25,000 in qualified tips from their taxable income. Action needed: Employers must ensure proper tip reporting and may want to review payroll processes.  Phases out for higher earners ($550,000 married / $400,000 single).

Overtime Workers Benefit Too

Employees can deduct up to $12,500 in overtime wages from taxable income. Important: You'll need to report overtime separately on W-2s starting in 2025.  Phases out for higher earners ($300,000 married / $150,000 single).

Enhanced Family Benefits

  • Child Tax Credit: Increased to $2,200 per child (nonrefundable portion).  Income phase outs at $400,000 married / $200,000 single.
  • Childcare Credit: More generous starting in 2026 for middle-income families
  • 529 Plans: Can now cover up to $20,000/year for K-12 expenses (starting 2026)

Planning Opportunities for Business Owners

Estate Planning Window

The enhanced estate and gift tax exclusion is now permanent at an inflation-adjusted $15 million per person starting in 2026. This creates opportunities for business succession planning.

Charitable Giving Strategy

Starting in 2026, non-itemizers can deduct up to $1,000 (single) or $2,000 (married) for charitable gifts. However, itemizers face a new 0.5% AGI floor for charitable deductions.

Deduction for Taxpayers age 65+

Taxpayers age 65+ can claim a temporary $6,000 deduction per person (2025-2028).  This deduction phases out at 6% of income in excess of $150,000 married / $75,000 single.

 

Action Items for Your Business

Before September 30, 2025:

  • Consider electric vehicle purchases for your business fleet
  • Evaluate energy-efficient building improvements

Before Year-End 2025:

  • Review payroll systems for overtime reporting requirements
  • Assess charitable giving strategies
  • Consider SALT deduction timing if in a high-tax state

Plan for 2026:

  • Prepare for new charitable deduction rules
  • Evaluate 529 plan contributions for employee education benefits
  • Review family benefit offerings

What We're Watching

The SAVE student loan repayment program ends in 2026, which could affect employees with student loans. Additionally, several provisions are temporary and will require monitoring for potential extensions.

 

Next Steps

Tax law changes this significant create both opportunities and complexity. We recommend scheduling a strategy session to:

  • Identify which provisions benefit your specific business
  • Ensure compliance with new reporting requirements
  • Optimize your tax strategy for both business and personal situations
  • Plan for temporary provisions that may expire

Ready to make the One Big Beautiful Bill work for your business? Contact us today to schedule your strategy session. We'll help you navigate these changes and identify opportunities that make sense for your situation.

 

This summary highlights key provisions but doesn't cover every detail. Tax situations vary significantly, and professional guidance is essential for proper planning and compliance.