How the New Tax Law Could Impact Your Business Strategy
Not a Business Owner?
If you’re looking for how the new law affects your personal taxes, read our companion post:
How the 2025 Tax Law Could Affect You: What to Know Now
We cover deductions for tips, overtime, car loans, child credits, and more.
On July 4, 2025, the One Big Beautiful Bill became law—and it brings a wide range of business-focused tax changes designed to encourage investment, reduce compliance burdens, and create planning opportunities.
Whether you run a small firm or a mid-size company, these changes could affect how you buy equipment, deduct expenses, structure compensation, and report income.
Here’s what every business owner should know.
Major Business Tax Changes Under the New Law
1. 100% Bonus Depreciation Is Back—and Permanent
Businesses can now fully expense qualified property (100%) immediately—without worrying about phaseouts.
This includes:
Machinery, equipment, vehicles
Office furniture and certain building improvements
Specified plants (no longer restricted by planting date)
This applies to property acquired after January 19, 2025. Assets acquired earlier follow the old phase-down rules.
2. Section 179 Deduction Limit Increased
The Section 179 expensing limit has been raised from $1 million to $2.5 million, and the phaseout threshold is now $4 million.
Key changes:
More businesses now qualify for full expensing
Applies to property placed in service after December 31, 2024
Indexed for inflation beginning in 2025
This provides major first-year savings for growing businesses.
3. Expanded Bonus Depreciation for Real Property (New)
A new rule allows qualified production-related real property to be 100% expensed under an elective provision.
To qualify:
Must be used in manufacturing or refining
Construction must start between Jan. 20, 2025, and Dec. 31, 2028
Property must be placed in service by Dec. 31, 2030
Applies only to property used for substantial transformation—not retail or office use
4. QBI Deduction Now Permanent—with Expanded Access
The 20% Qualified Business Income (QBI) deduction has been made permanent and now includes:
A $400 minimum deduction for active businesses with at least $1,000 in QBI
Expanded income phase-in ranges:
$75,000 (single), $150,000 (joint), up from $50K/$100K
This gives more flexibility for small businesses and pass-through entities.
5. Domestic R&D Expensing Restored
Taxpayers may once again fully deduct domestic research and experimental expenses in the year incurred.
Key points:
Applies to software development and other qualifying R&D
Foreign research must still be amortized over 15 years
Businesses may elect to amortize domestic R&D over 60 months if preferred
6. Business Interest Deduction Rules Improved
The adjusted taxable income (ATI) calculation for the business interest deduction now includes depreciation and amortization, permanently.
This boosts ATI, which increases how much interest you can deduct
Also expands eligibility to include dealers of RVs, trailers, and campers
7. New 1099 Reporting Thresholds
Starting in 2026:
1099-NEC and 1099-MISC reporting threshold increases from $600 to $2,000
Reduces filing requirements for small payments to vendors and contractors
Threshold will be adjusted for inflation starting in 2027
This will reduce reporting headaches for small businesses.
8. Charitable Deduction Rule Change for Corporations
New rule adds a 1% floor:
C-corporations must donate more than 1% of taxable income to get a charitable deduction
The 10% overall cap still applies
Carryforward rules vary depending on the reason for disallowance
This limits the deductibility of small charitable gifts, so larger planning is needed.
9. Employer Credits Expanded
Child Care Credit: Increased to 40% (50% for small businesses), with a cap of $500,000 to $600,000
Paid Family and Medical Leave Credit: Expanded to allow a credit for premiums paid—not just wages used
Credits now apply to third-party administered plans and joint employer facilities
10. Clean Energy Tax Credits Phased Out
Many clean energy-related incentives for businesses are being eliminated between 2025 and 2027, including:
Clean vehicle credits
Energy-efficient building deductions
Solar and wind investment credits
Restrictions for foreign-owned businesses claiming clean energy credits
If you’re planning energy-related upgrades, review eligibility now.
What You Should Do Now
Review planned capital purchases and time them to maximize bonus depreciation
Revisit your business structure (LLC vs. S corp) in light of QBI and interest rules
Update your accounting for new R&D expensing and reporting rules
Explore tax credits for child care and family leave benefits
Monitor income thresholds to avoid losing deductions
Plan ahead—especially if you’re selling appreciated assets or making partner payments
We’re Here to Help
At Adair Advisory Group, we help business owners take advantage of tax law changes like these to grow, reinvest, and plan strategically.
We’ll help you:
Evaluate entity choice and deduction timing
Maximize Section 179 and bonus depreciation
Conduct a reasonable compensation analysis
Build a forward-looking tax strategy based on the 2025 law
Let’s talk before year-end.
This article is for educational purposes only and should not be considered legal, tax, or investment advice. Please consult a qualified professional about your specific situation.