TLDR: The OBBBA overhauls tax rules with bigger deductions, permanent benefits, and new incentives for businesses, tech companies, and individuals starting in 2025.
Key Highlights:
- Permanent Tax Provisions: The OBBBA provides long-term tax certainty for businesses by making several key tax rules, like the EBL rule and bonus depreciation, permanent.
- Reduced Reporting Burden: The act simplifies tax compliance for businesses by significantly raising the reporting thresholds for both 1099-NEC and 1099-K forms.
- Enhanced Employee Benefits: OBBBA enhances fringe benefits by making the employer-provided student loan benefit permanent and boosting the childcare tax credit.
- Individual Taxpayer Relief: Individuals benefit from the act through new tax deductions for tips and overtime and a temporary increase to the SALT cap.
- Pro-Innovation for Tech: The bill is a win for the tech sector by restoring the ability to immediately expense R&E costs and expanding the QSBS gain exclusion for investors.
We've got some exciting news to share that's going to make a significant impact on your business and your personal finances. The "One Big Beautiful Bill Act" (OBBBA) has officially been signed into law, and it's a massive piece of legislation with a ton of great stuff to unpack. Don't worry, we're going to break it all down into easy, bite-sized pieces so you can see how this can be a huge win for you.
The Bill's Grand Entrance
The OBBBA officially became law on July 4, 2025, and it's a comprehensive piece of legislation that touches on everything from business deductions to individual tax rates. The key thing to remember is that many of these provisions go into effect this year, so it's a great time to start planning and making the most of the changes!
Big Wins for Businesses
The OBBBA is a major victory for businesses, especially small and medium-sized enterprises. Here's a look at some of the key changes that could benefit you.
- Permanent Tax Certainty: The bill makes several key tax provisions from the 2017 Tax Cuts and Jobs Act permanent, giving businesses the long-term certainty needed to make strategic investments and plan for the future.
- Boosted Small Business Deduction: The popular 20% small business tax deduction, which was set to expire, is not only made permanent but also increased to 23%! This is a huge boost for millions of entrepreneurs.
- Permanent Excess Business Loss (EBL) Rule: The OBBBA makes the EBL limitation rule permanent. This means if your total business losses exceed your business income plus a specific threshold (e.g., $313,000 for single filers in 2025), that excess loss can be carried forward as a Net Operating Loss (NOL) to offset income in future years.
- Better Expensing and Depreciation: The act restores and makes permanent 100% bonus depreciation for qualifying property and increases the Section 179 expensing cap. This is fantastic for cash flow, allowing you to fully deduct the cost of new equipment in the first year.
- Higher 1099-NEC Threshold: Starting in 2026, the reporting threshold for Form 1099-NEC for contractors will be raised from $600 to $2,000 and will be adjusted for inflation, which is great news for businesses that work with a lot of freelancers.
The Tech Sector's Takeaway
For our fellow tech enthusiasts and companies, the OBBBA presents some unique opportunities designed to foster innovation.
- R&E Costs: The legislation restores the ability to immediately expense domestic research and experimentation (R&E) costs. This is a game-changer for startups and growing tech companies, providing immediate tax relief that can be reinvested into developing new products and services. Just remember, foreign R&E expenses still have to be spread out over 15 years. See our blog on R&E expense HERE.
- IT Infrastructure: The 100% bonus depreciation is especially relevant for tech companies that are constantly upgrading their IT infrastructure, servers, and other essential equipment.
- 1099-K Reporting: The bill brings relief to FinTech companies by rolling back the lower reporting threshold for Form 1099-K to $20,000 in gross payments AND 200 transactions or more in a calendar year.
- Expanded QSBS Gain Exclusion: This is big news for investors! The gain exclusion for Qualified Small Business Stock (QSBS) issued after July 4, 2025, is now 50% if held for three years, 75% for four years, and 100% for five years. The exclusion amount is also increased from $10 million to $15 million.
Changes to Employee Benefits
The OBBBA also introduces some exciting new fringe benefits and updates to health plans that can help you attract and retain top talent.
- Enhanced Childcare Credit: The tax credit for employer-provided childcare is getting a major upgrade, with the credit percentage jumping to 40% (or 50% for eligible small businesses). The annual cap is also increasing to $500,000.
- Permanent Student Loan Help: The popular $5,250 per year employer-provided student loan repayment benefit is now permanent! Starting in 2026, this limit will also be adjusted for inflation.
- New "Trump Accounts" for Kids: The OBBBA creates a new, tax-deferred savings account for every U.S. child at birth. Employers can contribute up to $2,500 annually for employees' children born between 2025 and 2028.
- Health Plan Improvements: The bill expands HSA eligibility to include Bronze-level and catastrophic health plans on state exchanges. It also makes the rule allowing telehealth coverage before the deductible permanent, and increases the Dependent Care FSA limit from $5,000 to $7,500.
- Executive Compensation: The $1 million tax deduction limit for executive compensation now applies to the top five executives on a group-wide basis, impacting how compensation packages are structured.
A Look at Your Personal Finances
The OBBBA has some great news for individuals, too!
- SALT Cap Increase: The State and Local Tax (SALT) cap is increasing to $40,000 ($20,000 for married filing separately) for 2025 and will gradually rise before reverting back to $10,000 in 2030.
- Permanent Standard Deduction: The bill makes the current, higher standard deduction amounts permanent. For 2025, the amounts are $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers.
- New Tax Deductions: You can now take a new deduction for tips (up to $25,000), overtime compensation (up to $12,500), and auto loan interest (up to $10,000). There’s also a new deduction of $6,000 for qualified individuals age 65 or older.
- Saying Goodbye to Energy Credits: On a final note, the bill repeals most energy-related credits from the Inflation Reduction Act. Most notably, the clean vehicle credit is gone for vehicles acquired after September 30, 2025.
Ready to Make the Most of It?
Navigating these new tax laws can be complex, and getting it right is crucial. Whether you're a small business owner looking to leverage the new deductions or a tech leader trying to understand the implications for your R&E, having a clear strategy is essential.
Curious about how the OBBBA can work for you? Our team of experts is here to help. Reach out to us for a personalized consulting session to understand how this act can benefit your business.