The One Big Beautiful Bill (OBBB) delivers several retroactive and expanded tax breaks for 2025 that could lower your tax bill in a significant way. Here are the deductions and credits that could save their business money.

Section 179 Deduction

Section 179 lets you deduct the full cost of qualifying equipment and property in the year you buy it, instead of spreading the deduction over several years. For 2025, the deduction limit increased, making it easier for business owners to write off vehicles, machinery, computers, and other assets immediately.

Bonus Depreciation

Bonus depreciation allows businesses to deduct a large percentage of an asset’s cost in the first year. A phase-down rate was scheduled under a previous law, but the OBBB reinstated 100% bonus depreciation rates for property placed in service after January 19, 2025. Combined with Section 179, this can significantly reduce taxable income for companies investing in machinery, vehicles, or technology.

Immediate R&D Expensing

Before 2025, research and development costs had to be amortized over five years. The OBBB brought back immediate expensing for R&D costs.

If your business invests in developing new products, software, or processes, you can now deduct those expenses in full right away. Additionally, businesses with costs in 2022, 2023, and 2024 can file amended returns for refunds.

The 20% QBI Deduction

The Qualified Business Income (QBI) deduction continues to allow eligible owners of pass-through entities, such as S corporations, partnerships, and sole proprietorships, to deduct up to 20% of qualified business income.

The deduction now phases out at higher income levels. And beginning this year, there is a minimum QBI deduction of $400 for businesses with at least $1,000 of QBI.

Expanded Business Interest Deduction

The OBBB eased restrictions on deducting business interest expenses. Previously, many businesses faced limitations based on their earnings. The expanded rules make it easier to deduct interest on business loans and lines of credit.

1099-K Reporting Threshold Rolled Back

Good news for gig workers and small online sellers: the $600 reporting threshold for payment platforms is gone. Instead, the reporting requirement reverts to the previous rule: more than $20,000 in gross payments and over 200 transactions.

Additional Tax Breaks That May Affect Small Business Owners Personally

Several changes may also benefit small business owners personally and their employees

• No tax on tips and overtime within specified income limits
• Expanded standard deduction: $15,750 for single filers; $31,500 for joint filers; and $23,625 for Head of Household.
• Child Tax Credit increase: $2,200 for qualified taxpayers with adjustments for inflation annually
• Higher SALT deduction cap: Increased from $10,000 to $40,000 for 2025 (phases out for those earning over $500,000)
• Senior deduction: An additional $6,000 senior deduction for taxpayers aged 65 and older (phases out at $75,000 for single filers and $150,000 for joint filers)
• Auto loan interest deduction: A new deduction of up to $10,000 in auto loan interest for new personal vehicles assembled in the U.S.

These tax breaks only help if you use them, so work with a tax professional to make sure you’re claiming everything you’re entitled to.