The One Big Beautiful Act of 2025 introduces major permanent and expanded tax benefits for businesses. These changes are designed to simplify reporting, lower taxable income for business owners, and incentivize investment and employee benefits.
Key updates include:
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Permanent 100% bonus depreciation
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Expanded Section 199A Qualified Business Income (QBI) deduction
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Higher thresholds for 1099 reporting
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Increased employer-provided child care credit
These provisions can significantly reduce tax liability, improve cash flow, and create new planning opportunities for businesses of all sizes.
1. Permanent 100% Bonus Depreciation
What Changed
Previously, the 100% first-year bonus depreciation was temporary and scheduled to phase down. Now, it is permanent for property acquired and placed in service on or after January 19, 2025.
Qualifying property includes:
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New or used machinery and equipment
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Certain software
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Furniture and fixtures
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Qualified improvement property (QIP) for interior commercial building upgrades
Real-Life Example – Manufacturing Company
Before: A manufacturing firm purchasing $500,000 in new equipment could only expense part of the cost in year one, spreading deductions over several years.
Now: They can deduct the full $500,000 in the first year, potentially reducing their tax bill by over $100,000 (assuming a 21% corporate rate).
Who Benefits Most
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Capital-intensive businesses like manufacturing, construction, and farming
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Businesses upgrading technology or machinery
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Companies opening new locations needing full build-out and equipment
2. Expanded Section 199A Qualified Business Income (QBI) Deduction
What Changed
The QBI deduction remains at 20%, but the new law:
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Makes it permanent
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Adds a minimum $400 deduction for taxpayers with at least $1,000 of QBI
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Expands phaseout ranges to $150,000 (MFJ) and $75,000 (single), allowing more high-income taxpayers to qualify
Real-Life Example – Self-Employed Consultant
Before: A single consultant earning $80,000 in QBI qualified for the deduction but was close to the $50,000 phaseout limit, losing part of the benefit if income increased.
Now: The higher $75,000 phaseout limit means they can grow income without losing the deduction as quickly, and small earners still get a $400 minimum deduction.
Who Benefits Most
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Sole proprietors, partnerships, and S corporation owners
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Higher earners previously phased out of the deduction
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Small businesses with low QBI still get a guaranteed deduction
3. Eased 1099 Reporting Requirements
What Changed
Form 1099-NEC and 1099-MISC: Threshold raised from $600 to $2,000 in 2026 (indexed for inflation).
Form 1099-K: Threshold for third-party network transactions (e.g., PayPal, Venmo, Uber, Airbnb, Etsy) raised to $20,000 with no transaction count requirement.
Real-Life Example – Small Retailer
Before: A boutique store paying $700 to a freelance photographer needed to issue a 1099-NEC.
Now: No 1099 is required unless payments exceed $2,000, reducing paperwork.
Example – Side Hustler: A part-time crafter selling on Etsy and receiving $5,000 in payments via PayPal no longer gets a 1099-K unless payments exceed $20,000.
Who Benefits Most
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Small businesses paying freelancers occasionally
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Gig workers avoiding unnecessary 1099-K filings for low amounts
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Bookkeepers and accountants with reduced compliance workload
4. Increased Employer-Provided Child Care Credit
What Changed
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Large businesses: 40% of qualified expenses, max credit $500,000
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Small businesses: Up to 50% of qualified expenses, max credit $600,000
Qualified expenses include:
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Building or operating on-site child care facilities
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Contracting with off-site providers to offer discounted care for employees
Real-Life Example – Mid-Sized Firm
Before: A company spending $200,000 annually on child care support for employees could claim up to $150,000 in credits.
Now: They can claim up to $100,000 more in credits—making child care benefits more affordable to provide.
Who Benefits Most
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Employers looking to attract and retain working parents
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Small businesses offering creative benefits packages
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Employees gaining access to affordable child care options
Who Benefits Overall from These Business Provisions
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Small to mid-sized businesses taking advantage of QBI and reduced 1099 burdens
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High-growth companies investing in equipment and facilities
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Gig economy workers & platforms relieved of excessive reporting
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Employers with family-friendly policies able to recoup more costs
Frequently Asked Questions (FAQ)
Q1: Can I still use Section 179 expensing with bonus depreciation?
A: Yes, Section 179 and bonus depreciation can be used together, but bonus depreciation applies automatically unless you elect out.
Q2: Does the QBI deduction apply to C corporations?
A: No, QBI applies only to pass-through entities and certain sole proprietorships.
Q3: If I pay a contractor $1,900 in 2026, do I file a 1099-NEC?
A: No, because the new threshold will be $2,000.
Q4: Are online sellers under $20,000 in PayPal receipts free from reporting?
A: For 1099-K purposes, yes, but you must still report all taxable income.
Q5: Can the child care credit exceed my tax liability?
A: No, it’s non-refundable—but unused portions may carry forward in some cases.
Bottom Line
The 2025 business tax provisions create permanent advantages for investment, simplify compliance, and encourage employee benefits. Whether you’re a small business owner, self-employed professional, or corporate leader, these changes can lead to significant savings—if you plan ahead.
Expert Help for Your Business Tax Strategy
At Find a Good Accountant (FAGA), we specialize in guiding business owners through complex tax law changes—so you can focus on growth, not paperwork.
📞 Call us today: 760-423-6226
📍 Visit us: 74333 Highway 111 Suite 103, Palm Desert, CA 92260
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