One Big Beautiful Bill Act: Key Changes
On July 4th, President Trump signed in to law "One Big Beautiful Bill Act ("BBB")". While this bill has many changes, we've narrowed down the list to the most prominent changes that will affect small businesses.
Individual tax changes
Business tax changes
Key Individual Tax Changes Highlights
1
SALT Cap Increase
Increased from $10,000 to $40,000 for taxpayers earning $500K or lower in MAGI
2
Child Tax Credit
Permanent increase to $2,200 per child with $1,400 refundable with inflation adjustments
3
Tax-Free Tips
Temporary deduction of up to $25,000 for qualified tips for individuals with AGI $150K ($300K for MFJ) or below
4
Standard Deduction
Permanently increased effective Jan 1, 2025: Single $15,750, HoH $23,625, MFJ $31,500 (all indexed)
Key Business Tax Changes Highlights
1
R&E Expenses
Full expensing for domestic R&E from Jan 1, 2025 (Foreign R&E remains at 15-year amortization)
2
Bonus Depreciation
Permanently extends and increases to 100% for property acquired and placed in service on or after Jan 19, 2025
3
Section 179
Increases maximum expense amount to $2,500,000 and phaseout threshold to $4,000,000
4
Form 1099-K
Reverts to prior rule: reporting only required when transactions exceed $20,000 AND exceed 200 transactions
Charitable Contribution Changes
Individual Deductions
A new $1,000 deduction ($2,000 for MFJ) is available for non-itemizers after 2025. For itemizers, deductions apply only to contributions exceeding 0.5% of their contribution base.
Corporate Deductions
A new 1% floor is added, meaning only contributions above 1% of taxable income are deductible. The maximum deduction remains at 10% of taxable income.
New Tax Deductions for Individuals
Tips Deduction
Up to $25,000 deduction for qualified tips received by individuals with AGI $150K ($300K for MFJ) or below
Overtime Deduction
Up to $12,500 ($25,000 for joint returns) for qualified overtime compensation (2025-2028)
Car Loan Interest
Up to $10,000 deduction for interest on new car loans (2025-2028) for US-assembled vehicles
Estate Tax & QBI Changes
Estate & Gift Tax Exemption
$13.61M
Current (2024)
Inflation-adjusted exemption that would revert to ~$5M after 2025
$15M
New Law
Indexed from 2026 and made permanent
Qualified Business Income (QBI)
The 20% deduction for pass-through income is made permanent with expanded phase-out ranges:
- MFJ: Increased from $100,000 to $150,000
- Single filers: Increased from $50,000 to $75,000
- New minimum $400 deduction for taxpayers with at least $1,000 of QBI
Small Business Stock (QSBS) Changes
New Tiered Exclusion Structure
1
3 Years
50% exclusion of gain
2
4 Years
75% exclusion of gain
3
5+ Years
100% exclusion of gain
The bill also increases eligibility by raising the corporation's aggregate gross assets limit from $50 million to $75 million at the time of issuance.
Form 1099 Reporting Thresholds
Form 1099 General Threshold
$600
Current
For payments made during a trade or business
$2K
New Law
Indexed annually for inflation after 2026
Form 1099-K Threshold
$600
Current
For payments received for sale of goods and services
$20K
New Law
AND must exceed 200 transactions (reverts to prior rule)