New Republican Tax Proposal: Key Changes for Small Businesses and Individuals

A new tax proposal from House Republicans could bring significant changes for both small businesses and individual taxpayers. The proposed bill, aligned with the Trump administration's economic goals, aims to extend and expand several popular provisions from the 2017 Tax Cuts and Jobs Act (TCJA).

If you’re a small business owner or individual taxpayer trying to stay ahead of potential tax changes, here’s what you need to know.

Proposed Business Tax Changes: What Small Business Owners Should Watch

1. Bonus Depreciation Makes a Comeback

The bill proposes a revival of 100% bonus depreciation for qualified assets placed in service between 2025 and 2029. This allows businesses to immediately expense the full cost of qualifying purchases, improving cash flow and incentivizing investment.

What’s new? The definition of qualified property would expand beyond the original TCJA criteria, giving more businesses access to this powerful deduction.

2. R&D Expense Deduction Restored

Under current law, domestic research and development (R&D) costs must be amortized over 15 years—an obstacle for startups and tech companies. The new proposal would reverse this, letting businesses fully deduct R&D expenses in the year incurred.

This change could offer significant relief for small businesses in software, biotech, and innovation-heavy industries.

3. QBI Deduction Increased and Made Permanent

One of the most valuable tax breaks for pass-through entities, the Qualified Business Income (QBI) deduction, was set to expire. The new bill proposes to:

• Make the QBI deduction permanent

• Increase the deduction rate from 20% to 23%

• Adjust income limitations and thresholds for wider accessibility

  
  

This would be a big win for sole proprietors, S corps, and partnerships.

Individual Tax Changes: What You Should Know

1. Lower Personal Income Tax Rates

The bill would lock in the TCJA’s individual tax brackets permanently. Additionally, it proposes inflation-based reductions in tax rates, with the exception of the top 37% bracket.

2. Higher Standard Deduction

The proposal would:

• Make the standard deduction increases from TCJA permanent

• Add a further $1,500 increase through 2028

3. Expanded Child Tax Credit

Key changes include:

• Increasing the Child Tax Credit to $2,500 for 2025–2028

• Reverting to $2,000 afterward

• Making the Additional Child Tax Credit permanent

4. New Deduction for Tips and Overtime

Employees would be able to deduct income from tips and overtime pay, offering new tax relief for hourly workers and service industry professionals.

What’s Next for the 2025 Tax Reform Bill?

This tax legislation is still in the proposal stage. It must:

• Pass the House of Representatives

• Pass the Senate in identical form (or go through reconciliation)

• Receive approval from the President

  
  

Final tax law could look very different, so now is the time to start planning and stay informed.

Takeaway for Small Business Owners and Taxpayers

This proposed tax bill includes significant provisions that could impact your bottom line, especially if you run a small business, own a pass-through entity, or have family-related deductions.

Stay ahead of tax law changes by consulting a tax professional and subscribing to updates. Proactive planning now could save thousands later.