Crosslin wanted to keep these updates and opportunities available to you top of mind as we enter tax season. Below are the key business tax breaks under the One Big Beautiful Bill Act (OBBBA) that are relevant, especially this tax season. These provisions are designed to help your business reduce taxable income, improve cash flow, and plan for growth.
Permanent 20% Qualified Business Income (QBI) Deduction
- Keeps the Section 199A deduction alive for pass-through entities (S-corporations, partnerships, sole proprietorships).
- Allows most eligible business owners to deduct up to 20% of their qualified business income, lowering taxable income.
- Expanded phase-in ranges and a minimum deduction of $400 for businesses with at least $1,000 in QBI provide broader access.
100% Bonus Depreciation (Restored and Made Permanent)
- Businesses can fully expense qualifying assets (including new and used equipment, office systems, vehicles, and qualified production property) in the year they’re placed in service.
- This accelerates deductions that would otherwise be spread out over years, boosting cash flow.
Higher Section 179 Expensing Limits
- The immediate expensing threshold is increased to $2.5 million with a $4 million phase-out, adjusted annually for inflation—allowing more property and equipment purchases to be deducted in the current year.
Research & Development (R&E) Expense Deductions
- Domestic R&D costs generally can now be deducted immediately rather than amortized over five years.
- Small businesses (average receipts ≤ $31 million) can even apply this retroactively to amend earlier returns from 2022–2024.
Restored EBITDA-Based Interest Expense Deduction
- The deduction limit for business interest expense is returned to being calculated on an EBITDA basis (earnings before interest, taxes, depreciation, and amortization), which typically allows larger interest deductions for capital-intensive businesses.
Qualified Small Business Stock (QSBS) Enhancements
- Broader exclusion of capital gains on the sale of qualified small business stock (e.g., increased cap and shorter holding period rules in some cases) that can benefit owners and investors.
Favorable Interest & Reporting Thresholds
- The reporting thresholds for some tax forms (like 1099-NEC/MISC) were raised (e.g., to $2,000) – reducing paperwork for some small businesses.
- The IRS also restored the higher threshold for 1099-K reporting (e.g., $20,000 + 200 transactions) that can reduce compliance burden.
What to Know for This Filing Season
Many of the OBBBA provisions are already effective for the 2025 tax year returns we are now filing in 2026, particularly permanent tax breaks like QBI and bonus depreciation. Other changes (like certain clean energy incentives or specialized provisions) may phase out or change in future years, so let’s discuss your particular situation.
As always, contact the Crosslin tax team with any questions. We are here to help!