You’ve probably heard some chatter about the One Big Beautiful Bill Act (OBBBA), formally known as H.R. 1. Maybe you wondered: “Does this really matter for me and my business?” The short answer: yes. This sweeping piece of legislation affects nearly everyone, and for business owners, it brings some very welcome tax changes.

Let’s unpack the highlights.

The Qualified Business Income (QBI) Deduction Stays Put

One of the biggest sighs of relief for owners of pass-through businesses, including sole proprietorships, partnerships, limited liability companies, and S Corporations, is that the Qualified Business Income Deduction won’t go away at year’s end.

The OBBBA also expanded income phase-outs for this deduction and created a $400 minimum deduction for activities generating $1,000 or more of qualified business income.

If you’ve ever bumped up against income thresholds and watched your deduction shrink, you know how frustrating it felt. Under the new rules, more business owners will qualify for the full benefit of up to a 20% deduction on qualified income.

100% Bonus Depreciation Is Back

The bill makes 100% bonus depreciation permanent for most tangible personal property with a recovery period of 20 years or less, reversing the gradual phase-down that began in 2023. The 100% deduction applies to qualified property acquired after January 19, 2025, and placed in service after that date.

That means if you invest in new machinery, office upgrades, or even certain vehicles, you can deduct the full amount in the year you place it in service instead of spreading the deduction out over years. For real estate investors, it’s a game-changer.

Higher Section 179 Expensing Limits

Section 179 expensing is another option for writing off the cost of property and equipment. The OBBBA raises the limits on Section 179 expensing from $1.25 million to $2.5 million. It also increased the phase-out to $4 million (up from $3.12 million). Both limits are now indexed for inflation, starting in 2025.

Talk to your tax advisor if you need help deciding between bonus depreciation or Section 179. In some cases, one method may be more beneficial than the other.

No More Amortization Hassle for R&D Expenses

Innovation costs money, and since 2022, businesses have had to amortize (i.e., spread out) their research and development (R&D) expenses and write them off over a five-year period. That rule made cash flow planning tricky and discouraged some companies from investing in innovation.

The OBBBA rolls back that requirement, meaning you can once again deduct your R&D expenses immediately. If your business tinkers, tests, or creates, whether it’s new software, improved processes, or next-gen products, this is fantastic news. It frees up more cash now, not years from now.

New Tip and Overtime Income Reporting Requirements

Here’s a perk your employees will appreciate: The OBBBA introduces a new deduction for employees who receive tips and overtime wages.

Of course, your employees will need to know how much tip and overtime income they received to calculate the deductions on their tax returns, and they’ll be looking to you to provide that information.

Unfortunately, the IRS announced it won’t revise the 2025 Form W-2 to accommodate these new reporting requirements. Instead, it’s working on updated guidance and forms for the 2026 tax year.

For now, it allows employers to approximate a separate accounting of the amount of overtime and tips employees earn, and will outline reasonable methods for doing so. It’s a good idea to talk to your payroll provider to find out how they plan on making that data available.

Higher 1099-NEC and 1099-MISC Reporting Thresholds

If you’ve ever groaned at the stack of 1099s you had to prepare each January, this one’s for you: The OBBBA raises the reporting thresholds for 1099-NEC and 1099-MISC forms to $2,000 per payee per year, starting in 2026. That figure will be indexed for inflation. Before the OBBBA, non-employee payments of $600 or more triggered a 1099 filing requirement.

Student Loan Repayments are a Permanent Benefit

The OBBBA also makes permanent a popular perk: the option for employers to help pay off employees’ student loans tax-free.

Previously, this was a temporary measure that kept getting extended. Now, it’s here to stay, so you can contribute up to $5,250 per year and exclude it from the employee’s income. That amount will be indexed for inflation starting in 2027.

Turn Tax Law Into Opportunity

Taken together, these changes could mean more money stays in your business today and fewer administrative headaches (at least where 1099 forms are concerned).

And what can you do with that extra cash? Pay down debt, hire new team members, reinvest in growth, or just breathe a little easier knowing you’ve got more financial cushion.

Legislation like the One Big Beautiful Bill Act can feel overwhelming at first glance, but it offers small business owners several powerful opportunities to save on taxes and improve cash flow.

Now is the time to:

• Review your year-end tax planning strategy
• Reconsider investments you’ve been putting off
• Explore R&D opportunities you might have sidelined

And most importantly: don’t go it alone. Contact NewWay Accounting. We’ll help you make sense of the law, build a tax-smart strategy, and turn today’s legislative changes into tomorrow’s success.