What Does the OBBB Mean for Small Business Owners? Your Essential Guide to New Tax Changes
It's not what you make, it's what you get to keep.
The One Big Beautiful Bill made tax savings permanent. But how much you save depends entirely on your profit level.
Since July 4th, we've had 100+ conversations with business owners asking the same questions every time:
"What changed?"
"Do I need to restructure?"
"Am I missing something huge?"
Every answer: It depends.
The pattern became clear: Your profit level determines everything.
The Bottom Line Up Front
Owning a small business is still the best tax deal in America. The OBBB doesn't change that fundamental truth—it actually strengthens it. But the strategies that work for a $150k business won't work for a $400k business, and what saves money at $300k might cost you at $600k.
Watch Our Complete OBBB Breakdown
Before we dive into the details, you can watch our full webinar where our founder, Mitchell Baldridge (CPA, CFP®), and COO, Evan Baldridge, walk through all these changes and answer the most common questions we've been hearing:
What Actually Changed: The Two-Part Stack
BUSINESS CHANGES (PERMANENT!):
- 20% QBI deduction extended permanently
- 100% bonus depreciation BACK FOR GOOD
- R&D immediate expensing restored
PERSONAL CHANGES (Expire 2028-29):
- State tax deduction (SALT) jumps from $10k to $40k
- Tips and overtime now deductible
- Car loan interest now deductible
Here's why this matters: A client with $300k profit used to optimize just the business side. Now we optimize BOTH:
- Business: S-Corp + QBI = $25k saved
- Personal: SALT + itemizing = $10k saved
- Combined strategies = $35k total
This is the new playbook: stack both business and personal strategies for maximum impact.
Itemizing Just Got More Attractive
The new SALT (State and Local Tax) provision makes itemizing worth considering again:
- New SALT cap: $40,000 (up from $10,000)
- Income phase-out: Starts at $500k, minimum $10k at $600k
- Duration: Through 2029 with annual 1% increases
Standard deduction increases:
- Single: $15,750 (up from $15,000)
- Married Filing Jointly: $31,500 (up from $30,000)
New Deductions You Can Take Without Itemizing
Several valuable deductions are now available even if you take the standard deduction:
Social Security Bonus (through 2028)
- $6,000 deduction for those 65+
- Phase-out: $75k/$150k to $175k/$250k
- Both spouses can claim it
Car Loan Interest (through 2028)
- Up to $10,000 deduction
- Must be assembled in USA
- Phase-out: $100k/$200k to $150k/$250k
Tips Income (through 2028)
- Up to $25,000 deduction
- Requires documentation
- Phase-out: $150k/$300k
Overtime Pay (through 2028)
- Up to $12.5k/$25k deduction
- No marriage penalty
- Phase-out: $150k/$300k
Estate Planning Gets Simpler
- Exemption increases to $15M/$30M permanently starting 2026
- Time to review complex trust structures—many may no longer be necessary
- Consider larger gift transfers while you can
- Don't forget state tax implications
Business Provisions: The Real Game-Changers
For New Business Owners: The Playbook Still Works
If you're just getting started, our tried-and-true advice remains solid:
- Separate business and personal accounts
- Track everything to catch all possible deductions
- Reconcile books monthly
- Track property and sales taxes
- Save receipts for personal deductions
- Consider S-Corp election when profit hits $100k+
Calculate your S-Corp savings with our free calculator
QBI Deduction: Now Permanent with Improvements
The 20% Qualified Business Income deduction was set to expire in 2026—now it's permanent with enhancements:
Key Changes:
- Higher phase-out ranges: $75k/$150k (up from $50k/$100k) starting 2026
- New minimum deduction: $400 for QBI of $1,000+
- SSTB limitations remain but with more breathing room
SSTB Phase-out Ranges:
- Starts: $197k/$394k
- Ends: $272k/$545k
- Includes: legal, accounting, medical, architecture, engineering, consulting, financial services
R&D Expenses: Immediate Relief
100% immediate expensing through 2029 for:
- Software development
- Employee compensation for R&D
- Materials and supplies
- Third-party research
- Overhead costs
- Pilot models and prototypes
- Related travel expenses
Bonus: Small businesses (under $31M average gross receipts) can amend previous returns back to 2021 to claim this benefit retroactively.
Depreciation Advantages: Three Ways to Win
Section 179 (Permanent)
- Immediately expense up to $2.5 million
- For assets acquired after December 31, 2024
- Perfect for equipment and technology purchases
100% Bonus Depreciation (Permanent)
- First-year write-off for assets acquired after January 19, 2025
- Ideal for short-term rental and commercial real estate investors
- Great for growing businesses with larger asset acquisitions
Manufacturing Incentive (Through 2030)
- 100% write-off on manufacturing property
- For construction beginning 1/19/25 through 1/1/31
- Major benefit for manufacturers, especially high-tech and clean energy
Your Exact Playbook by Profit Level
Here's how we structure clients at each profit level (and what to ignore):
Under $100k → Build the Foundation
Business side:
- Separate accounts (non-negotiable)
- Track everything (deductions matter!)
- Reconcile books monthly
Personal side:
- Track property and sales taxes
- Save charity receipts
Potential savings: $3-8k/year
Skip for now: S-Corps (not worth the complexity yet)
$100k-$300k → The Sweet Spot
This is where the magic happens.
Business moves:
- S-Corp election ($10-25k saved)
- Optimize salary for QBI
- Strategic retirement contributions
Personal moves:
- Itemize with up to $40k SALT deduction
- Track all new deductible expenses
Total potential savings: $20-40k annually
Real example - $200k profit client:
- Before OBBB: LLC with standard deduction = $65k total tax
- After implementation: S-Corp with optimized salary + itemizing = $42k total tax
- Same business. $23k less tax. Every year.
$300k-$500k → Strategic Zone
You keep the big wins but need to be strategic.
Business:
- Full QBI deduction (if not SSTB)
- Equipment timing for 100% write-offs
- Key strategy: Defer income from 32% bracket to 24%
Personal:
- Full $40k SALT benefit
- New deductions start to phase out
The sweet spot strategy:
- Max 401(k): $69k
- Prepay expenses (rent, insurance, supplies)
- Buy equipment before year-end
- When you hit the 24% bracket, STOP
Why? Future tax rates are unknown. Take the 24% win.
Potential savings: $40-60k/year
Over $500k → Navigate the Maze
Phase-outs hit hard:
- SALT drops back to $10k (lose $30k benefit)
- Tips/overtime deductions gone
- QBI phases out (for service businesses)
Still works:
- Equipment strategies
- Advanced entity structures
- QSBS planning if building to sell
Remember our caution sign from the webinar? These new tax provisions are like powerful tools—they can save you significant money, but they require expertise to use safely and effectively.
Don't DIY complex tax strategy. The potential savings are substantial, but so are the risks of getting it wrong.
Your July Action Plan
This week:
- Review your 2024 profit (6 months of data!)
- Identify which bracket you're in
- Clean up your bookkeeping
Next 30 days:
- Under $100k: Open business account and get organized
- $100-300k: File S-Corp election, optimize salary
- $300-500k: Plan deferrals to 24% bracket
- Over $500k: Build a comprehensive plan with a professional
The OBBB made procrastination expensive—time to get to work!
Ready to Stop DIY Tax Strategy?
At Visor, we built our services specifically for business owners who want expert handling of:
- Bookkeeping that captures every deduction
- Tax strategy that maximizes OBBB benefits
- Tax preparation by professionals who understand business
Sign up, connect your banks, and get back to work. Let us implement the OBBB strategies so you can focus on growing your business.
Resources
Mitchell Baldridge, CPA, CFP® is the Managing Partner at Visor. Evan Baldridge serves as COO. Together, they help small business owners navigate complex tax situations and maximize their savings through expert bookkeeping, tax strategy, and preparation services.
