The recently enacted “One Big Beautiful Bill Act” includes substantial tax reforms to support the growth of small businesses. Small business owners can take advantage of these tax breaks starting now for expenses dating back to January 20, 2025.
This guide outlines the most impactful provisions of the law, including permanent deductions, enhanced credits, and expanded eligibility criteria. It provides clear, step-by-step instructions to help business owners navigate the changes and optimize their tax strategies. Download the guide or read below to learn more.
1. Permanently Claim the 20% Qualified Business Income (QBI) Deduction
Who qualifies: Sole proprietors, partners, and S corporation shareholders.
What to do:
- Calculate your qualified business income (QBI) for the year.
- Deduct 20% of your QBI on your federal tax return every year—this deduction is now permanent.
- If your QBI deduction is low, check your eligibility for the new inflation-adjusted minimum deduction (at least $400).
- If you were previously ineligible for the deduction, determine whether changes to the phase-in of existing limitations make your business eligible.
Action item:
Work with your accountant or tax professional to determine your eligibility and claim the maximum deduction each year.
2. Immediately Deduct Qualifying Research & Experimental (R&E) Expenses
Who qualifies: Businesses with domestic R&E spending, especially those with average annual gross receipts of $31 million or less.
What to do:
- Track your U.S.-based R&E expenses each year.
- Deduct 100% of your qualifying R&E expenses this year on your 2025 tax return.
- If your annual gross receipts average $31 million or less, you may apply this benefit retroactively for tax years 2022–2024.
Action item:
Review past returns with your tax professional to seek retroactive refunds if eligible.