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The One Big Beautiful Bill Act, which was recently signed into law, includes significant changes to the tax code and introduces new incentives that could greatly impact small businesses. While much of the media focus has been on its effects on large corporations, the implications for entrepreneurs, founders, and independent business owners are equally important, if not more so. This law alters deductions, enhances liquidity options, and changes the planning process for research and development, financing, and even business exits.
One of the immediate benefits is the expansion of Qualified Small Business Stock (QSBS) treatment. According to Business Insider, the gross asset limit for qualifying companies has increased from $50 million to $75 million. Additionally, investors can now exclude up to $15 million or ten times their investment, whichever amount is greater, from capital gains taxes, provided they meet the holding period requirements. This change is significant for founders and early investors. If you're in tech, manufacturing, or any capital-intensive sector, it could greatly enhance your liquidity planning. The new tiered structure allows for a 50% exclusion after three years, 75% after four years, and full exclusion after five years, providing flexibility that was not available before.
Another boost for small business owners is the permanent extension and expansion of Section 199A and Section 179 deductions. Per the National Federation of Independent Business (NFIB), the pass through income deduction jumps from 20% to 23%, and the cap for Section 179 expensing more than doubles to $2.5 million. This gives small business owners better tax positioning and makes it easier to write off equipment and capital expenditures in the year they’re incurred. CBIZ notes this also simplifies year-end planning less guesswork and more certainty about what will stick.
Research & development (R&D) expensing also returns in full force. As KBKG reports, businesses can once again immediately deduct U.S. based R&D costs, retroactive to 2022. This is especially beneficial for smaller firms with under $31 million in revenue, many of whom had been penalized by the earlier amortization rules. Even better, amended returns are allowed, meaning if you missed out in the last two years, you can recoup those deductions now. For anyone building software, prototyping, or pushing product innovation, this is a cash flow lifesaver.
In tandem with R&D changes, the bill restores 100% bonus depreciation and makes it permanent. Mayer Brown confirms that assets like equipment, qualified production property, and machinery placed in service before 2031 can be fully deducted in the first year. This move gives owners the ability to time purchases for maximum tax advantage. If you're making year-end buying decisions, now’s the time to strike.
On the financing side, there’s significant relief in how interest expense deductions are calculated. Under the updated Section 163(j) rules, deductions are now based on EBITDA instead of EBIT, essentially ignoring depreciation and amortization in the limit. Lewis Rice points out that this could allow many small businesses with higher financing costs to deduct significantly more. If you’re leveraged or planning growth via financing, it’s time to recalculate those thresholds.
Not all changes in the new bill are beneficial. It makes the limitations on excess business losses (EBL) permanent, which restricts how much loss a non-corporate taxpayer can deduct each year. According to Buchanan Ingersoll & Rooney, the cap for 2025 is approximately $313,000 for individuals and $627,000 for joint filers. This limitation could affect startups, real estate investors, and businesses that are heavily investing. If you are incurring losses for strategic reasons, it's important to consider how to carry those losses forward over time.
While the bill provides numerous tax benefits, it also quickly phases out green energy incentives. According to KBKG, popular clean energy credits such as Section 179D, 45L, and credits related to electric vehicles will expire by mid-2026. If you plan to invest in electric vehicle fleets, solar panels, or energy-efficient upgrades, act quickly; funding will be depleted soon.
There are significant changes in the rules governing Opportunity Zones (QOZ) and Qualified Production Property (QPP). BIPC has confirmed that QOZs are now a permanent part of the tax code, providing developers and investors with more certainty. Additionally, QPP now qualifies for bonus depreciation if it is placed into service before 2031. This is a major advantage for real estate developers or manufacturers planning new projects, but it still requires careful timing.
It is also important to note that these changes are already in effect. The law took effect in early July 2025, which means that Q3 financials, estimated tax payments, and year-end projections all need to be reassessed immediately. Both CBIZ and CFO.com emphasize the necessity of updating your cash flow models and tax strategies before the close of Q3. Failing to do so could lead to underpaid estimates or misaligned capital planning.
Schedule a call with your CPA or tax professional this week. Have them review your asset purchases, financing strategy, and cash flow forecast. Rerun your R&D and interest deduction models. If you're running losses or planning any green upgrades, adjust for the new caps and phase-outs. And if you're looking for outside investors or planning to exit in the next 3–5 years, QSBS planning could significantly improve your valuation strategy.
This bill is not just an abstract issue for corporations in Washington; it directly affects your finances. Whether you own a bakery upgrading your equipment, a software company investing in new products, or a construction firm looking to install solar panels, these changes can either free up capital for you or leave you at a disadvantage if you delay. The advantage of small businesses has always been their agility. Now is your chance to take advantage of that.