Six ‘Big, Beautiful’ impacts on small businesses
By: Brian A. Trzcinski CEPA
MassMutual specialist in business market development.
This article will ...
Note passage of the One Big Beautiful Bill Act will likely have a major impact on small businesses.
List new tax deductions and rules that pertain to small business enterprises.
Point out the enhancements to gig economy platforms and childcare support.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, averting the largest automatic tax increase in American history at the end of this year when the 2017 Tax Cuts and Jobs Act (TCJA) was set to expire. The new law includes a range of permanent, pro-growth tax reforms designed to boost small business investment, encourage hiring, and drive economic growth and innovation.
And while there remains looming economic challenges, higher interest rates, and pressures pertaining to tariffs, the OBBBA brings some relief and certainty that should ease the financial and operational strain on small businesses.
Here are six ways the legislation specifically affects American small businesses. Please note, the six ideas described here may or may not apply to your business, so please talk with your tax and legal advisor:
Making permanent the Qualified Business Income (QBI) deduction. The 20 percent small business tax deduction (also known as the section 199a deduction) for sole proprietorships, partnerships, S-corps and LLCs, which was scheduled to expire at the end of the year, is made permanent and extends the amount of income subject to the phase-out rules. Specifically, the income threshold for single taxpayers is extended by $25,000 and for joint filers by $50,000. The bill also includes a new minimum deduction of $400 for taxpayers with at least $1,000 of qualified business income from one or more actively conducted trades or businesses in which they materially participate. Roughly 26 million small businesses claim this deduction. The flat 21 percent tax rate for C-Corporations remains in place.
Expanding Section 179 expensing. The bill increases the Small Business Expensing Cap from $1.22 million to $2.5 million. It also brings back and makes permanent “bonus depreciation,” which allows for an immediately write-off of 100 percent (versus 40 percent) of the cost of new qualified property acquired after January 19, 2025, such as equipment, vehicles and software.
Supporting research and development (R&D) expenses. If your business has U.S.-based R&D expenses, the bill allows you to deduct them immediately. Currently, businesses are required to spread out the cost of their R&D expenses over five years instead of writing them off all at once. Now, small businesses can deduct these expenses in the year they occurred.
Making the 2017 marginal income tax rate cuts permanent. Without this provision, five out of seven marginal (individual) income tax rates would rise at the end of the year. Nine out of 10 small businesses are organized as pass-through entities and pay regular income tax rates rather than the C-Corporation rate. The current rates are made permanent with annual inflation adjustments starting in 2026.
Easing the gig economy burden. The bill repeals the 1099-K gig worker rule, which required gig economy platforms (third party settlement organizations (TPSO), examples include PayPal, Venmo, eBay, Etsy, Uber, Lyft) to report transactions over $600 to the IRS. Now, third party apps are only required to send a 1099-K if over the reportable transactions exceed $20,000 in payments and over 200 transactions. While you’re still required to report any business income received through these platforms on your taxes, this change reduces the reporting burden.
Enhancing the employer-provided childcare credit. Section 45F, which is designed to incentivize businesses to invest in childcare, now provides qualifying small businesses (gross receipts of $25 million or less for the preceding 5 years) with a maximum tax credit of up to $600,000 per year on up to 50 percent of qualified childcare expenses provided to employees. This credit is effective beginning in 2026.
OBBBA creates permanent tax relief for many small businesses, barring any future action by Congress. However, there are some who say that, while it offers significant tax breaks and incentives for investment and employee benefits, there remain concerns about the potential rising cost of obtaining capital and the rollback of healthcare subsidies.
You should carefully assess your individual circumstances and consult with tax advisors and financial professionals to determine which tax breaks impact your business the most and how best to take advantage of them.
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Provided by Jeffrey Albin, a financial representative with Vault Financial, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual).
The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice.
You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of MassMutual.
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