Guide for Small Businesses: Taking Advantage of the “One Big Beautiful Bill” (OBBBA)

A person calculating taxes with a small US flag on the desk

On July 4, 2025, President Donald Trump signed the law known as the “One Big Beautiful Bill” (OBBBA), a comprehensive tax reform that introduces significant changes for small businesses in the United States. This legislation provides new opportunities to reduce taxes, encourage investments, and improve competitiveness. Below, we explain how your business and your individual tax return can benefit from this law.

✅ Key Benefits for Small Businesses

  1. Permanent 20% Deduction for Pass-Through Business Income

    Owners of small businesses can permanently deduct 20% of their qualified income, which reduces tax liability and increases profitability. This deduction also directly impacts your Form 1040, lowering your taxable income and, therefore, the amount of federal taxes you owe.

  2. Immediate Expensing for Equipment and Property

    The limit for immediate expensing under Section 179 has increased from $1 million to $2.5 million. This allows you to deduct the full cost of new equipment and vehicles in the year of acquisition. For your Form 1040, this means you can reflect these deductions on the relevant pass-through business income section (Schedule C or E), reducing your net taxable income.

  3. Restoration of Deductibility for Research & Development (R&D) Expenses

    You can now immediately deduct R&D expenses instead of amortizing them. This not only benefits your business but also lowers your net income reported on your Form 1040, which can result in paying less tax and potentially increasing your refund.

  4. Expanded Exclusion of Gains from the Sale of Small Business Stock

    If you sell qualified small business stock, the law increases the gain exclusion limit from $10 million to $15 million. This can be reflected on your Form 1040, preventing part of your capital gain from being taxed and improving your personal liquidity.

  5. Employer-Provided Childcare Tax Credit

    If your business provides childcare services to employees, the tax credit has increased up to $600,000 for small businesses. This not only benefits your business but can also positively affect your Form 1040 if you are an owner-employee paying for childcare, increasing the dependent care credit and reducing your taxes.

🧭 How to Take Advantage of the Law on Your Tax Return (1040)

  • Review your pass-through business income: Apply the 20% deduction directly on your Schedule C, E, or F to reduce taxable income.
  • Plan equipment and asset purchases: Section 179 deductions and R&D expenses reduce your net income and can increase your refund on Form 1040.
  • Evaluate available tax credits: Benefits like childcare credits can be applied to your individual tax return.
  • Consult a tax professional: To maximize benefits, ensure your Form 1040 reflects all deductions and credits available under OBBBA.

The “One Big Beautiful Bill” offers significant opportunities to increase your business profitability and reduce personal tax liability. With proper planning and professional tax guidance, you can fully take advantage of this legislation for both your business and individual tax return.

Need help understanding how the OBBBA affects your business?

Chat with us on WhatsApp