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5 Tax Breaks on The Table What Business Owners Should Know About the Latest Proposals

Tax Breaks

A sweeping new bill in Congress, informally dubbed The One, Big, Beautiful Bill, could bring major changes to federal business tax policy. While the legislation is still under review, its potential impact is already generating buzz among business owners.

Here are five key tax provisions that could be reshaped by this bill and what they might mean for your business:

1. Bonus Depreciation

  • Current Rule: Businesses can currently deduct 40% of the cost of eligible new and used equipment in the year it’s placed into service. This is set to drop to 20% in 2026 and phase out entirely by 2027.
  • Proposed Change: The bill would restore 100% bonus depreciation, retroactively applying to property acquired after January 19, 2025, and extending through 2029.
  • Why It Matters: A full deduction in the year of purchase can significantly improve cash flow, especially for capital-intensive industries like manufacturing, logistics, and construction.

2. Section 179 Expensing

  • Current Rule: For 2025, businesses can expense up to $1.25 million in qualified asset purchases, with the deduction beginning to phase out at $3.13 million.
  • Proposed Change: The expensing limit would increase to $2.5 million, with a new phaseout threshold of $4 million for assets placed in service after 2024. These amounts would be indexed for inflation annually.
  • Why It Matters: Higher thresholds mean more immediate deductions and fewer assets tied to long-term depreciation schedules—especially helpful for small and mid-sized businesses looking to scale.

3. Qualified Business Income (QBI) Deduction

  • Current Rule: The QBI deduction, set to expire after 2025, allows owners of pass-through entities (like sole proprietors, partnerships, LLCs, and S-corporations) to deduct up to 20% of qualified business income.
  • Proposed Change: The bill would make the QBI deduction permanent and increase the deduction to 23% for tax years starting after 2025.
  • Why It Matters: Making this deduction permanent creates more predictability in long-term planning. The higher deduction could mean substantial savings for eligible businesses.

4. Research and Experimental (R&E) Expensing

  • Current Rule: Businesses must capitalize and amortize domestic R&E expenses over five years (15 years for foreign research), as mandated by the Tax Cuts and Jobs Act (TCJA).
  • Proposed Change: The bill would reinstate immediate expensing for R&E costs incurred from 2025 through 2029. Businesses would have the option to deduct or amortize those costs.
  • Why It Matters: This is especially important for startups and technology-driven companies that invest heavily in innovation. Immediate deductions reduce taxable income and promote reinvestment in R&D.

5. Information Reporting Thresholds

  • Current Rule: Businesses must file Form 1099-NEC for any non-employee compensation over $600 paid during the year.
  • Proposed Change: The bill would raise the reporting threshold to $2,000 and index it for inflation starting in 2025. Additional changes would also affect 1099-K rules for third-party payment platforms.
  • Why It Matters: Raising the threshold would reduce the paperwork burden for small engagements. While income under $2,000 still needs to be reported to the IRS, fewer 1099 forms would be required, easing compliance efforts.

What Else Is on the Table?

These five changes are just part of what The One, Big, Beautiful Bill proposes. Additional provisions include:

  • Changes to business interest expense deductions
  • Expanded employee benefits
  • Elimination of federal tax on eligible tips and overtime

The bill has passed the House and is now under review in the Senate. If revised, it will return to the House for final approval before heading to President Trump for signature. Until then, its provisions are subject to change—and may even apply retroactively.

Stay Prepared

These potential tax breaks could offer significant savings and strategic planning opportunities. But with the bill still in flux, professional guidance is crucial.

Have questions about how these changes could impact your business?
Contact us today to review your tax strategy and prepare for what’s next.