How the Final One Big Beautiful Bill Act Impacts Small Business Taxes in 2025

The recent passage of HR 1 EAS, also known as the Big Beautiful Bill, brings significant tax changes for small businesses, including the extension of the QBI deduction, bonus depreciation updates, and increased Section 179 limits. The first Trump administration’s landmark tax bill, the Tax Cuts and Jobs Act of 2017, had helped usher new tax changes that helped changed the business landscape for the last half a decade. This bill will be no different.

From things like decreases in income tax rates, the Qualified Business Income (QBI) Deduction, bonus depreciation, and changes to the standard deduction. Most of these were slated to revert back to their pre-2017 levels, but most of these ended up being extended through the Big Beautiful Bill. See below for a comprehensive list of the changes that relate to small business owners and how they could help your business.

Key Changes for Small Businesses

1. Qualified Business Income Deduction 

   The QBI Deduction was slated to expire in 2026. The bill will make this deduction permanent. This allows small business owners to take a minimum deduction of $400 up to 20% of their qualified business income, subject to income and property limitations and phaseouts for high earners and specified service trade or service business owners. This is good news for small business owners to continue to allow them to take this tax deduction on their personal taxes.

   
   

2. Bonus Depreciation 

   Section 168(k), otherwise known to business owners as bonus depreciation had been amended from it’s TCJA language, which stated that the bonus depreciation was 100% until 2022, with the percentage reduced by 20% every year thereafter. If we were under the TCJA rules, you would only be able to depreciate 40% of the property placed in service in 2025, 20% in 2026 and 0% for every year after. The HR1 EAS bill makes the old 100% bonus depreciation amount permanent if it was placed in service after January 19^th of 2025 until 2030. This is good news for business owners with capital expenses. This is particularly helpful for the real estate, construction, manufacturing, technology, and transportation industries, as there are many improvements and equipment purchased in the normal course of business.

   
   

3. Section 179 Deduction 

   Section 179, otherwise known as the hummer deduction, has seen a limit increase. This section can be used to take a 100% deduction on various real estate improvements, vehicles, and other equipment. In 2025 the deduction would have been limited to $1.25 million in property. This bill increases the limit to $2.5 million in a year. This is a large increase and will affect the same capital-intensive industries such as real estate and construction.

   
   

4. Research and Development Deduction

   In the past, you were required to capitalize and amortize the costs of research and development of products over a 15-year period. Under the new rules, you’re able to deduct domestic R&D expenses immediately, allowing businesses to take advantage of immediate expenditures. This is meant to incentive more R&D spending due to the immediate effect on business finances. This is advantageous for R&D industries such as manufacturing, start-ups, and software firms.

Conclusion

The changes in the bill were meant to be a reversion back to some of the landmark staples of the original TCJA of 2017 in the first Trump administration. From an extension of the QBI deduction, changes and increases to bonus depreciation and the 179 deduction, as well as allowing for immediate deduction of domestic R&D expenses, there is going to be an incentive for businesses, big and small, to make capital expenditures. Either through purchasing new vehicles and equipment, or through real estate improvements and more research and development, there is no shortage tax advantages for businesses in the new “Big Beautiful Bill”.