When Congress passed the H.R.1 commonly referred to as the “Big Beautiful Bill” (H.R. 1) on July 4, 2025, this bill impacts how small businesses deduct income, report expenses, and make year-end decisions. While some changes are permanent, others have clear expiration dates.
This summary outlines the most relevant updates for LLCs, S-Corps, and sole proprietors, with practical guidance for how to respond in 2025.
[Sec. 70105]
The 20% QBI deduction is no longer set to expire. For eligible pass-through businesses, this deduction allows you to reduce taxable income by up to 20%—assuming your business qualifies under existing income thresholds and wage rules.
Why it matters:
This change provides long-term planning clarity. If you’re earning more than $100,000 in net business income, now is the time to evaluate whether your current entity structure supports full use of this deduction.
[Secs. 70102–70103]
The law maintains the increased standard deduction and introduces an additional $4,000 deduction for business owners aged 65 or older with income under $75,000 (or $150,000 for joint filers). This provision is in effect through 2028.
What to consider:
If you qualify, this deduction can lower your 2025 tax liability and should be reflected in estimated payments. Business owners nearing retirement may want to adjust income strategy while this window is open.
[Sec. 70120]
For taxpayers with adjusted gross income under $500,000, the cap on deducting state and local taxes has increased to $40,000. This change is temporary and ends after 2029.
Implications for small businesses:
If your business income flows through to your personal return, and you’re in a high-tax state, this may make itemizing deductions more favorable again—especially if you’ve defaulted to the standard deduction in recent years.
[Secs. 70201 & 70202]
Two new above-the-line deductions are available through 2028:
● Up to $25,000 in reported tips
● Up to $12,500 in overtime income ($25,000 for joint filers)
These reduce adjusted gross income directly and phase out at higher income levels.
Action step:
If you receive tips or compensate yourself through a structure that includes qualifying overtime, keep separate records to ensure eligibility at year-end.
[Secs. 70301 & 70306]
The law preserves 100% bonus depreciation and increases Section 179 expensing limits. Qualifying business assets—including equipment, vehicles, software, and office improvements—can be fully deducted in the year they’re placed in service.
Plan accordingly:
If you’re considering significant capital purchases, doing so before December 31 may reduce your 2025 tax liability.
● Does your current entity structure support long-term use of the QBI deduction?
● Will you benefit from itemizing under the increased SALT cap?
● Are you tracking tips, overtime, or senior status for 2025 filing accuracy?
● Have you reviewed upcoming asset purchases for Section 179 eligibility?
Contact Accolade Accounting to schedule a consultation. Let’s make this bill work for your business.
When it comes to reliable accounting services in Atlanta, GA, look no further than Accolade Accounting. With a highly experienced accountant team, we have assisted numerous businesses in developing and implementing effective accounting systems. If you need expert guidance, don’t hesitate to contact our certified public accountants, call 470-646-2663
