Small Business Guide to Recent Tax Changes

Authored by: Brett Leibfried—Partner, CPA  | Updated: March 27, 2026

Are you aware of any new tax rules impacting small businesses?

In 2025, the One Big Beautiful Bill Act transformed several long-discussed proposals into permanent law. This blog breaks down the key tax changes, explains how small businesses have been impacted, and offers actionable recommendations for owners.

What do the latest OBBBA tax changes mean for your business?

The OBBBA made permanent several provisions to proposed tax laws, and some had been set to expire. Understanding these changes is important for financial planning and operational approaches.

Below is a summary of what changed and what it means for your business.

Qualified Business Income (QBI) Deduction (Section 199A)

QBI is now permanent and expanded, allowing eligible owners of pass-through entities, such as sole proprietorships, partnerships, and S corporations, to deduct up to 20% of their qualified business income. Prior to enactment, this deduction was set to expire after 2025, leaving significant uncertainty for small business owners.

OBBBA also introduced:

$400 minimum deduction for taxpayers with at least $1,000 in QBI
Increased phase-out range for high income earners to still qualify for QBI

Research & Experimental (R&E)

Under the Tax Cuts and Jobs Act, businesses are required to capitalize domestic research and development costs and amortize them over five years, creating a burden that hampered cash flow. The OBBBA restores immediate expensing for domestic R&E, allowing businesses to fully deduct these costs in the year incurred.

Small businesses: May elect to apply new rules to tax years after December 31, 2021. The deadline is July 6, 2026.
All businesses: May elect to deduct unamortized domestic R&E costs from 2022-2024 either entirely in 2025 or ratably over 2025 and 2026.

Bonus Depreciation

Under prior law, bonus depreciation was phasing down, sitting at 40% in 2025 and scheduled to decrease further before expiring entirely. The OBBBA permanently restored 100% bonus depreciation for qualifying assets that were acquired and placed in service after January 19, 2025.

Qualifying property:

Tangible MACRS property with a class life of 20 years or less
Computer software
Qualified improvement property
Certain Section 168(k) property

Both new and used assets are eligible, provided the taxpayer has not used the asset beforehand and it was acquired after January 19, 2025.

Because of these bonus depreciation law changes, cost segregation studies are even more effective. Contact your accountant for more information.

State and Local Tax (SALT) Deduction Cap

The OBBBA raised the SALT deduction cap from $10,000 to $40,000 for tax years 2025 through 2029 for taxpayers with income under $500,000. The cap reverts to $10,000 in 2030, but not for higher-income taxpayers.

For pass-through business owners who used to be limited by the $10,000 cap, this change may significantly affect whether itemizing deductions is advantageous over taking the standard deduction.

Section 179 Expensing

The OBBBA more than doubled the Section 179 immediate expensing limit for property placed in service after December 31, 2024. Beginning in 2025, businesses can immediately expense up to $2.5 million in qualifying property. The phase-out threshold increased to $4 million, meaning more capital-intensive businesses retain access to the full deduction.

Qualifying property:

Equipment
Furniture
Off-the-shelf software
Qualified improvement property

Increased Estate Limits

Beginning in 2026, the OBBBA permanently increased the federal gift and estate tax exemption to $15 million for individuals. For married couples, this provides a $30 million exemption, a significant development for individuals and families building succession plans for the next generation. The tax liability of wealth transfers and estates won’t be triggered.

Beneficial Ownership Information Filing

The final rule, issued on March 26, 2025, exempts all entities created in the U.S. from BOI reporting requirements under the Corporate Transparency Act. For domestic reporting companies, no filing is required and the exemption is finalized.

However, foreign entities registered to do business in the U.S. remain subject to reporting requirements.

New Provisions Added by the OBBBA

In addition to updating the proposed changes, the OBBBA introduced several new provisions that small business owners should be aware of.

Business Interest Expense Limitation Restored: The OBBBA restored the more favorable EBITDA-based calculation through 2029. Businesses with significant debt can deduct an increased amount of interest expense.

Qualified Small Business Stock (QSBS 1202) is a provision allowing investors to exclude up to 100% of capital gains. Here are the related changes:

Gain Exclusion Increased: The maximum gain exclusion per taxpayer increases from $10 million to $15 million.
Gross Asset Limit Raised: The issuing corporation’s aggregate gross asset limit increases from $50 million to $75 million.
Shorter Holding Period: The required holding period to begin qualifying for benefits is reduced from five years to three years.

A rather unfavorable change is the now-permanent Excess Business Loss Limitation, which had been set to expire after 2028. Under this rule, noncorporate taxpayers cannot use business losses exceeding the inflation-adjusted threshold to offset non-business income.

Starting in 2026, the thresholds decrease from where they currently sit at $313,000 for singles and $626,000 for joint filers. Business owners who anticipated large losses should model this interaction carefully with their tax advisor.

How Small Business Taxes Have Been Reshaped

OBBBA’s combination of permanent QBI, restored bonus depreciation, and immediate R&E expensing has significantly reshaped taxes for small business owners.

Your business structure continues to matter in how these tax changes affect you. Pass-through entities and LLCs benefit largely from the QBI deduction, while all business types benefit from the enhanced capital expensing rules.

However, large paper losses from depreciation may not fully offset other income each year. Businesses planning energy investments face compressed timelines and new restrictions. All these changes make proactive planning essential to capture the maximum benefits.

How Can Small Businesses Begin to Prepare?

Tax laws can change fast. These developing adjustments could offer substantial relief, boost cash flow, and incentivize investment and growth.

For small businesses, proactive preparation is crucial.

Stay informed and monitor new developments.
Consult with a professional for personalized advice and planning insights to help simplify and optimize your tax strategy.
Review and adjust internal policies. Re-evaluating investment plans, carefully considering the timing of income and expenses, and assessing their current business structure.
Enhance financial record-keeping to prepare for any new reporting requirements and maintain compliance.

At MBE CPAs, we know proactive planning is essential. By staying informed, seeking personalized advice from tax professionals, and improving financial record-keeping, your small business can turn potential challenges into opportunities for growth.

Let’s assess how these future changes could impact your business and develop a proactive strategy.

Conclusion

Tax policies for small businesses are set to experience significant changes, specifically regarding the Qualified Business Income (QBI) deduction, R&D expensing, bonus depreciation, and the SALT deduction cap. These developing adjustments could offer substantial relief, boost cash flow, and incentivize investment and growth.

At MBE CPAs, we know proactive planning is essential. By staying informed, seeking personalized advice from tax professionals, and improving financial record-keeping, your small business can turn potential challenges into opportunities for growth.

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