Contact us
Home › Understanding the One Big Beautiful Bill Act: Key Impacts for Closely Held Businesses

Insights & Resources

•

Understanding the One Big Beautiful Bill Act: Key Impacts for Closely Held Businesses

In this video spotlight, Courtney Mishoe, Tax Partner and Leader of our Outsourced Accounting Services practice, breaks down the key takeaways from H.R. 1, known as the One Big Beautiful Bill Act (OBBBA), for closely held businesses. She highlights four major changes every business owner should know—insights that could shape strategic decisions moving forward.

Filed under

Making Tax Strategy Less Taxing: What Business Owners Need to Know Now

Navigating new tax legislation can feel daunting for business owners. But with the recent passage of H.R.1, also known as the One Big Beautiful Bill Act (OBBBA), on July 4th, several provisions have now been made permanent—giving clarity and the opportunity for strategic planning.

Here are four key updates that every business owner should consider.

Qualified Business Income Deduction

The 20% deduction for qualified business income (QBI) is now permanent. Owners of S Corporations, partnerships or sole proprietorships can deduct 20% of their net business income on their federal return. This policy rewards operational efficiency and careful entity structuring, and when viewed as an earned benefit rather than a complex calculation, it’s easier to act decisively.

To maximize the benefit, business owners should evaluate their entity type, ensure their W-2 wages are optimized, and confirm how tangible assets affect their deduction—details that significantly influence eligibility.

Pass-Through Entity Tax Deduction

The pass-through entity tax (PTET) election has also been made permanent. This allows the business—not the individual owner—to pay state-level taxes on income sourced from high-tax states, creating a workaround for the federal State and Local Tax (SALT) deduction cap.

Previously, individuals paying state tax beyond the $10,000 limit received no federal benefit. Now, if the business makes the payment, it becomes federally deductible, offering substantial savings. The SALT cap has increased to $40,000, but begins to phase out once income exceeds $500,000, making PTET especially advantageous for high earners.

Bonus Depreciation and Section 179 Expensing

Bonus depreciation has been restored to 100%, and Section 179 expensing has been increased to $2.5 million. Businesses can fully deduct the cost of new fixed assets in the year they are purchased—a shift that favors capital investment and accelerates tax savings.

Many business owners hesitate to spend in uncertain environments. But now, the return on investment is immediate and measurable. If you’ve delayed equipment purchases due to unfavorable depreciation rules, this is the moment to reconsider.

Keep in mind that deduction eligibility varies across states, so it’s important to verify how your jurisdiction treats bonus depreciation and Section 179 with your tax advisor.

Research & Development Expensing

Beginning in 2025, businesses can fully expense research and development costs immediately, reversing a recent trend requiring amortization over five or ten years. This change not only simplifies tax treatment but encourages innovation by making the financial benefits of R&D more immediate.

Immediate expensing aligns with behavioral patterns that favor short-term gains, making this a strategic tool for both lowering tax liability and fueling growth.

Final Thoughts

While many of these changes restore elements from previous legislation, their permanence opens new doors. The key is to act with intention and clarity. By proactively engaging with your tax advisor, you can optimize your structure, deductions and investment strategy—ensuring that your financial planning aligns with both your business goals and evolving tax policy.

Need a single source for all things OBBBA?

Explore our OBBBA Resource Hub for the latest analysis, guidance and tools to help your business stay ahead.

Our Speaker:

Courtney Mishoe, Partner, Frazier & Deeter Advisory, LLC

Explore related insights

Explore Insights & Resources