Turning Tax Reform Into Strategy

On July 4, 2025, the One Big Beautiful Bill Act (OBBB) was signed into law. The title might sound lighthearted, but the effects are anything but. In one sweep, it locked in tax benefits that were set to expire, expanded others, and gave small business owners something they have not had in years: certainty.

For business leaders who have been operating under a cloud of “temporary” provisions, the new law provides a foundation to plan, invest, and grow with confidence. All major provisions are effective beginning with the 2025 tax year.

What Changed

• Pass-through deduction (Section 199A). The popular 20% deduction for pass-through businesses was due to expire at the end of 2025. OBBB made it permanent and increased it to 23%, effective for tax year 2025 and beyond. It also introduced updated income floors and phaseout thresholds.
• Section 179 expensing. The cap for immediate expensing of equipment, software, and other qualifying property doubled from $1.25 million to $2.5 million. The phase-out threshold rose as well, from $2.5 million to $4 million, giving businesses more headroom for capital investment.
• Qualified Small Business Stock (QSBS). Section 1202 benefits were expanded, raising the gain exclusion cap from $10 million to $15 million. Founders and early investors can now shield a larger portion of gains, reinforcing equity as a driver of capital for growth-stage companies.
• Form 1099 reporting. Thresholds for 1099-K, 1099-MISC, and 1099-NEC have been revised. The intent is to streamline reporting, but in practice, it means businesses must carefully adjust processes to avoid compliance headaches.
• Estate and gift taxes. The doubled exclusion amounts from the 2017 Tax Cuts and Jobs Act are extended, giving family-owned firms fresh opportunities for succession planning.
• R&D expensing. Businesses can now permanently deduct domestic research and development costs immediately, rather than amortizing them over years. This provision is effective for the 2025 tax year and is a major win for startups and innovators.
• Bonus depreciation. The law makes 100% bonus depreciation permanent for certain assets. This is another incentive to reinvest profits in growth.
• Employee-focused provisions. The act also introduced deductions like “No Tax on Tips” and “No Tax on Overtime.” These aim to boost take-home pay in industries that rely on hourly or tipped workers. The provisions are an indirect benefit for employers competing for talent.

Here’s Why It Matters

For years, small business owners lived in a cycle of uncertainty. Would the deduction vanish? Would depreciation rules shift again? That uncertainty made it difficult to commit to investments or plan succession.

The OBBB Act breaks that cycle. By making provisions permanent and raising thresholds, it transforms financial strategy. The nonprofit hesitating to invest in a new accounting platform now has tax incentives that support the decision. The family manufacturer considering an expansion has a stronger case for reinvesting. Startups can attract capital with more confidence, knowing QSBS exclusions are broader and R&D expensing is permanent.

The Strategic Angle

Tax law changes like this are often reported as technical wins or losses. But for small businesses, they are about momentum.

• Growth-minded owners can now accelerate investment with Section 179 and bonus depreciation.
• Nonprofits gain stability in long-term budgeting, with less risk of sudden tax changes altering their plans.
• Family enterprises can move succession discussions forward, taking advantage of extended estate and gift thresholds.
• Startups and innovators benefit from permanent R&D expensing and broader QSBS benefits, making the path to growth capital more attractive.

This is not just about paying less tax. It is about using the system to create leverage for smarter decisions.

Steps to Take

1. Consult your tax advisor. Understand how the new deduction floors and thresholds affect your specific entity structure.
2. Revisit capital plans. Use the higher Section 179 and bonus depreciation limits to evaluate new technology, equipment, or facilities.
3. Update compliance systems. Make sure your team is prepared for the revised 1099 rules and potential reporting complexity.
4. Explore succession opportunities. If you are a family-owned business, revisit estate and gift planning strategies.
5. Evaluate R&D credits. For innovative firms, immediate expensing is now permanent. Factor this into funding and hiring decisions.

The Bigger Picture

The OBBB Act is more than a tax bill. It is a strategic inflection point. By turning temporary provisions into permanent ones, it changes the calculus for business leaders across industries. Decisions that once carried uncertainty now come with stability.

The question is no longer “What happens if the law changes?” It is “How do we use this law to grow?”

That is the real story: tax reform not as red tape, but as a catalyst. And for small businesses and nonprofits, the ability to recognize and act on that shift may be the difference between simply surviving and building something enduring.