Here’s the short answer: the One Big Beautiful Bill Act (OBBBA) is the biggest small business tax law change since 2017. It permanently keeps the 20% Qualified Business Income (QBI) deduction, brings back 100% bonus depreciation, doubles Section 179 expensing limits, adds new payroll tax exemptions for overtime and tips, and rolls back Beneficial Ownership Information (BOI) reporting for most domestic businesses. Most of these changes are already in effect for the 2026 tax year.
If you’ve heard the name OBBBA mentioned by your accountant, in the news, or by another business owner and weren’t totally sure what it meant for you, you’re not alone. Here’s what actually changed, and what it means for how you run your business this year.
1. The 20% Small Business Deduction Is Now Permanent
The Qualified Business Income (QBI) deduction — which allows pass-through businesses like sole proprietorships, partnerships, and S-corps to deduct up to 20% of their business income — was set to expire. OBBBA makes it permanent, though phase-out thresholds and documentation requirements have been updated. If you run a pass-through business, this is one of the most valuable deductions you have, and it’s not going anywhere.
2. 100% Bonus Depreciation Is Back
Bonus depreciation lets you write off the full cost of qualifying equipment and asset purchases in the year you buy them, instead of spreading the deduction over several years. OBBBA permanently restores this to 100%. If you’ve been holding off on buying equipment, vehicles, or other business assets, this changes the math on when to make that purchase.
3. Section 179 Expensing Limits Doubled
Section 179 lets small businesses immediately expense the cost of qualifying equipment purchases, separate from bonus depreciation. OBBBA roughly doubles the limit, from $1.25 million to $2.5 million, adjusted for inflation going forward. Combined with bonus depreciation, this gives small businesses significant flexibility in how they handle major purchases.
4. New Payroll Tax Exemptions for Overtime and Tips
If you have employees who earn overtime or work in tip-based roles, OBBBA introduces new tax exemptions on that income. This affects payroll calculations and withholding, so if you handle payroll yourself, this is a rule change worth double-checking with your bookkeeper before your next pay run.
5. Beneficial Ownership Information (BOI) Reporting Rolled Back
BOI reporting, which required many small businesses to disclose ownership information to FinCEN, has been rolled back for most domestic entities under OBBBA. This removes a compliance requirement that had created confusion and extra paperwork for small business owners since it was introduced.
6. Immediate Expensing Restored for Research Costs
Businesses with domestic research and development costs can now expense those costs immediately under Section 174A, instead of amortizing them over multiple years. This mainly affects businesses investing in product development, but it’s a meaningful cash flow change for those it applies to.
7. Corporate Tax Rate Stays Flat, Higher 401(k) Limits
The corporate tax rate holds steady at 21%. On the individual and payroll side, 401(k) contribution limits have increased, giving business owners and employees more room to save pre-tax.
What This Means for Your Business Right Now
These changes don’t just matter on paper — they affect real decisions:
- Buying equipment? Bonus depreciation and higher Section 179 limits may make this year a better time than waiting.
- Running payroll with overtime or tipped employees? Your withholding calculations need to reflect the new exemptions.
- Filed a BOI report already? Confirm whether your business still needs to maintain that filing under the rolled-back requirements.
- Structured as a pass-through business? The permanent QBI deduction is worth reviewing with your tax preparer to make sure you’re capturing it correctly.
Tax law changes like this are exactly why year-round bookkeeping matters more than a once-a-year scramble. Missing a payroll update or a depreciation opportunity because your books weren’t current can cost real money. See our Tax Planning Services and Monthly Bookkeeping Services to see how we help Sanford-area businesses stay ahead of changes like these, or browse our full services.
Frequently Asked Questions
What is the OBBBA? The One Big Beautiful Bill Act (OBBBA) is 2025 tax legislation that reshapes small business taxes for 2026 and beyond, making several Tax Cuts and Jobs Act provisions permanent and introducing new deductions, exemptions, and compliance rollbacks.
When do OBBBA changes take effect? Most provisions took effect January 1, 2026, though some businesses began adjusting recordkeeping and payroll systems in 2025 to prepare.
Does OBBBA affect my Qualified Business Income (QBI) deduction? Yes. The 20% QBI deduction is now permanent, though phase-out thresholds and documentation requirements have been updated, so it’s worth reviewing with your tax preparer.
Do I still need to file a Beneficial Ownership Information (BOI) report? For most domestic small businesses, BOI reporting requirements have been rolled back under OBBBA. Confirm your specific filing status with a tax professional, since some exceptions may apply.
How does bonus depreciation help my small business? 100% bonus depreciation lets you deduct the full cost of qualifying equipment or asset purchases in the year you buy them, rather than spreading it out, which can significantly reduce your taxable income in a year you invest in your business.
Not Sure How These Changes Apply to Your Business?
Tax law changes are only useful if they’re applied correctly to your specific situation. Book a free consultation with our Sanford, FL team, or visit our homepage to see how we help small businesses stay compliant and tax-ready year-round.
