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The One Big Beautiful Bill Act: A Guide to Small Business Taxes

  • CRCFO
  • Sep 10
  • 3 min read

Updated: 14 hours ago


OBBB tax impact on small businesses.


President Trump signed the One Big Beautiful Bill Act (OBBB) into law on July 4, 2025. It implements significant changes to the tax code, which benefit small companies and entrepreneurs. This guide outlines the key rules that will impact your business operations and tax management.


Top 10 Effects of OBBB Tax Law on Small Businesses

1. Immediate R&D Tax Relief

You can now fully deduct research and development costs that occurred in 2025. This is a change from the old rule that said you had to split these deductions over five years. This helps organizations that are investing in new ideas, product development, and technology right away by giving them more cash flow. The new law also lets some businesses with average annual gross receipts of $31 million or less change their tax returns from 2022 to 2024 to undo the effects of IRC Section 174.


The recent legislation benefits firms that were impacted by the IRC Section 174 capitalization rules that went into effect in 2022. Smaller businesses get the most generous retroactive amendment privileges.

2. Enhanced Equipment Depreciation


If you put qualifying equipment, software, or technology into service between January 20, 2025, and December 31, 2029, you can get 100% bonus depreciation on it. You can deduct the full cost of major purchases in the year you make them instead of extending the deduction over multiple years.


3. Simplified 1099 Reporting Requirements


Less work to stay in compliance with higher reporting thresholds:

  • Starting in 2025, Form 1099-K will require both $20,000 and 200 transactions (both conditions must be met).

  • Starting in 2026, the reporting threshold for Form 1099-NEC and 1099-MISC will increase from $600 to $2,000. In addition, there will be annual adjustments to keep pace with inflation.


4. Permanent Business Income Deduction


The 20% Qualified Business Income (QBI) deduction for pass-through entities, including LLCs, S-Corps, partnerships, and sole proprietorships, is now permanent. This means that businesses that qualify will be provided tax relief for eligible business income.


5. Incentives for Investing in Manufacturing

The ability to write off 100% of the costs associated with building or expanding a factory helps businesses enhance their manufacturing capabilities in the US. There are also special provisions for Made-in-America initiatives.


6. Estate Tax Relief for Family Businesses


The estate tax exemptions were boosted significantly, rising to $15 million for individuals and $30 million for married couples. This makes it simpler to pass on family enterprises to the next generation without prohibitive tax impacts.


7. Efficiencies in Payments to Contractors

The law eases the administrative burden for businesses using independent contractors, with fewer 1099 forms required due to higher reporting thresholds. However, all payments remain taxable regardless of whether forms are issued.


8. Cash Flow Management

The law includes favorable rules for interest deductions. The potential impact will enable businesses to deduct a greater portion of their borrowing costs, a beneficial outcome for companies that rely on financing for operations or growth.


9. Certainty in Long-Term Tax Planning

Permanent provisions provide businesses with tax benefits that they can count on for long-term planning. Temporary provisions that last until 2028–2029, on the other hand, give firms the chance to time their investments and spending strategically.


10. Expanded Equipment Purchase Deductions

Businesses may now write off more equipment and property purchases because of enhanced Section 179 deductions, supporting growth and modernization efforts.



Important Dates


2025

  • R&D expenses can be fully deducted

  • Enhanced bonus depreciation begins

  • New 1099-K thresholds take effect

  • QBI deduction continues permanently


2026

  • Higher 1099-NEC and 1099-MISC thresholds begin

  • Annual inflation adjustments start for various provisions


2027

  • Inflation adjustments begin for 1099 thresholds

  • Enhanced backup withholding rules align with new thresholds


2029-2030

  • Some temporary provisions expire

  • Bonus depreciation window closes




How can we support you in achieving your firm's financial sustainability and growth?


Discover how Charles River CFO can support your organization's financial needs. Let's talk. (781) 431-0420 x1 or email us.

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