The OBBBA – signed into law on July 4, 2025 – makes sweeping tax changes for both individuals and business owners. Here’s what small business owners (and their families) should know:
1. Federal Income Tax Rates & Deductions
- Rates made permanent: The 2017 TCJA tax brackets are now permanent and still indexed for inflation.
- Standard deduction: Raised to $31,500 for joint filers in 2025 (up from $30,000).
- Senior deduction: New $6,000 per taxpayer age 65+ (phased out starting at $150k joint income). Applies even for itemizers.
- SALT deduction: Cap increased to $40,000, rising gradually through 2029, before reverting back to $10,000 in 2030.
- Charitable giving: Beginning in 2026, non-itemizers may deduct up to $1,000 ($2,000 joint) in cash gifts to qualified charities.
2. Tax Benefits to Small Business Owners
- Qualified Business Income (QBI) deduction: Section 199A/QBI deduction, up to 20% of qualified business income for pass-throughs like S-corps, partnerships, and other businesses is now permanent.
- Expensing & depreciation:
- Section 179 expensing limit permanently increased to $2.5M (phaseout at $4M).
- 100% bonus depreciation restored for assets acquired and placed in service after Jan 19, 2025.
- R&D expensing:
- Domestic R&D costs can once again be fully deducted in the year incurred.
- Small businesses (≤ $31M receipts) can apply this retroactively back to 2022 and amend prior returns.
3. Growth & Wealth-Building Provisions
- Qualified Opportunity Zones: Permanently extended, with emphasis on rural properties and stricter reporting rules.
- Estate & gift exemptions: Rise to $15M per individual ($30M per couple) in 2026, indexed for inflation.
- New “Trump Accounts”: IRA-style accounts for children born 2025–2028, seeded with a $1,000 federal contribution.
- 529 Plans: Significantly expanded uses and flexibility of Section 529 education savings plans.
4. Energy Incentives Winding Down
- Clean vehicle credits: End for vehicles acquired after Sept 30, 2025 (binding contracts before this date still qualify).
- Residential solar & clean energy credits: Expire after Dec 31, 2025, and must be installed—not just paid for—by that date.
5. Other Notable Changes
- Tips & overtime: Certain qualified tips and overtime pay are now free from federal income tax.
- Student loans: Federal borrowing capped at $257,500 lifetime.
- Meals deductibility: Eliminates the employer deduction for providing on-premises employee meals. Meals with clients remain 50% deductible.
At Ensign Partners, our goal is to do more than just keep you informed—we’re here to help you take action. We’ll be reaching out directly where these provisions create opportunities, and we invite you to connect with us anytime to talk through how the OBBBA impacts your personal or business tax strategy. Our team is committed to delivering proactive guidance, first-class service, and solutions that keep you one step ahead.