The One Big Beautiful Bill Act: What Changed for Small Business Owners
By Timothy LeGendre, CPA · Florida License #AC62625 · Published 2026-08-10
A Florida CPA breaks down what the One Big Beautiful Bill Act changed for small business owners: QBI, bonus depreciation, Section 179, tips, and 1099s.
The Short Answer
The One Big Beautiful Bill Act was signed in July 2025, and most of what matters to a small business owner is retroactive to January 1, 2025. That means it lands on the return you are filing right now, not some future year. The three provisions that move the most money are a permanent 20% QBI deduction, 100% bonus depreciation made permanent for property placed in service after January 19, 2025, and a Section 179 limit raised to $2.5 million. Two new deductions for tips and overtime run only through 2028. And one widely misread change, the jump in the Form 1099-NEC threshold from $600 to $2,000, does not apply to the 1099s you are issuing for 2025. Florida has no state income tax, so every dollar of federal relief here is a real dollar in your pocket.
What actually changed
Tax bills get reported in slogans. What follows is the version I use when I sit down with a client and work out what their return is going to look like. I have left out the provisions that only matter to very large companies, because they will not touch a business doing $250,000 to $5 million in revenue.
| Provision | Before | Under the new law |
|---|---|---|
| Standard deduction | $15,000 single / $30,000 joint / $22,500 head of household for 2025 | $15,750 single / $31,500 joint / $23,625 head of household, retroactive to Jan 1, 2025, and made permanent |
| QBI deduction (Section 199A) | Scheduled to expire after 2025 | Permanent at 20%, with wider phase-in ranges and a minimum deduction for active business income |
| Bonus depreciation | Phasing down, 40% in 2025 under prior law | 100% and permanent for qualifying property placed in service after Jan 19, 2025 |
| Section 179 expensing | About $1.25 million, phasing out around $3.13 million | $2.5 million limit, $4 million phaseout, for property placed in service after Dec 31, 2024 |
| Business interest limit | Adjusted taxable income measured on an EBIT basis | Back to an EBITDA basis from 2025, which lets more interest through |
| Form 1099-NEC / 1099-MISC | $600 filing threshold | $2,000, but only for payments made after Dec 31, 2025 |
| Form 1099-K | $600 with no transaction count | Back to $20,000 and 200 transactions, permanently |
The QBI deduction is permanent, and that changes planning
The 20% deduction on qualified business income was always scheduled to die after 2025. Every conversation I had about entity structure for the last few years carried an asterisk: this works, unless Congress lets it lapse. That asterisk is gone. Section 199A is now permanent, the phase-in ranges for specified service businesses are wider, and there is a minimum deduction for taxpayers with real active business income.
The practical effect is that S-Corp planning gets more valuable, not less. Your QBI deduction is calculated on business income after your own W-2 wages come out, so the salary you set as an S-Corp owner still moves the deduction. What has changed is that it is now worth building a multi-year plan around, instead of hedging against expiration. If you have been putting off an entity conversation because the rules might change, the reason to wait no longer exists. I go through this in more depth in my guide to the Section 199A deduction and my breakdown of reasonable salary.
Equipment: 100% bonus depreciation is back, permanently
Bonus depreciation had been stepping down and was at 40% for 2025 under prior law. The One Big Beautiful Bill Act restored it to 100% and made it permanent for qualifying property placed in service after January 19, 2025. Section 179 expensing rose at the same time, to a $2.5 million limit with the phaseout starting at $4 million of property placed in service.
For the contractors and trade businesses I work with in Lake County, the ceiling is no longer the issue. Both routes will fully expense the truck, the trailer, or the equipment. The question is which route to take, and they are not interchangeable. Section 179 cannot create or increase a net operating loss, so it is capped by your business income. Bonus depreciation can push you into a loss. In a strong year that distinction rarely matters. In a year where you bought heavily and earned lightly, choosing wrong either strands a deduction or creates a loss you cannot use efficiently.
There is also a timing trap worth naming. The 100% rate keys off property placed in service after January 19, 2025, not the date you ordered it or paid for it. Equipment that arrived in early January 2025 sits on the other side of that line. More detail in my Section 179 guide.
Tips and overtime: real, but temporary
These two got the most airtime and are the most widely misunderstood. Neither one makes the income tax-free. Both are deductions with caps, income phaseouts, and an expiration date.
Qualified tips
Up to $25,000 a year · Tax years 2025 through 2028
Phases out above $150,000 of modified AGI ($300,000 joint). For the self-employed, the deduction cannot exceed net income from the business where the tips were earned.
Qualified overtime
Up to $12,500 ($25,000 joint) · Tax years 2025 through 2028
Same phaseout thresholds. It applies to the premium half of overtime pay, not the whole overtime paycheck.
If you run a restaurant, a bar, or a salon, note what did not change: payroll taxes still apply to tips and overtime, the wages still have to be reported, and your obligations as an employer are the same as they were. Your staff may come to you believing their tips are now untaxed. They are not. They are deductible up to a cap, on their personal return, if their income is under the threshold.
The 1099 change that does not apply yet
This is the one I expect to cause the most trouble, because the headline and the effective date point in different directions. Yes, the Form 1099-NEC and 1099-MISC filing threshold went from $600 to $2,000. No, it does not apply to the forms you are issuing right now.
The $2,000 threshold applies to payments made after December 31, 2025. For the 1099s you file in early 2026 covering 2025 payments, the threshold is still $600. The new rule first shows up on the forms you issue in early 2027.
Separately, the Form 1099-K threshold is permanently back to $20,000 and 200 transactions, both of which must be met. That reverses the $600 rule that had been repeatedly delayed, and it means far fewer of you will receive a 1099-K from Stripe, Square, or PayPal.
One thing worth being blunt about: a higher reporting threshold does not make income tax-free. If a customer pays you $1,500 and no longer sends a form, that $1,500 is still taxable, and self-employment tax still applies once your net earnings reach $400. The form is a copy of information the IRS receives. Your obligation to report income does not depend on whether one arrives, which is exactly why books that capture every deposit matter more under the new threshold, not less.
What I would do about it
- Check that your 2025 return actually reflects the new law. The provisions are retroactive, but a return prepared on pre-OBBBA assumptions will still compute. It will just quietly overstate your tax. The standard deduction is the easiest tell: for 2025 it should read $15,750, $31,500, or $23,625, not $15,000, $30,000, or $22,500.
- Revisit deferred equipment purchases. If you held off on a truck or a piece of equipment because bonus depreciation was stepping down, that reason is gone. Model the purchase against your actual projected income rather than buying for the deduction alone.
- Reopen the S-Corp question if you shelved it. A permanent QBI deduction changes the multi-year math on entity choice and owner compensation. It is worth a fresh look, especially if your profit has grown since the last time anyone ran the numbers.
- Do not change your 1099 process for 2025. Keep issuing at $600 for this filing season and update your vendor thresholds for 2026 payments.
None of this is exotic planning. It is the ordinary work of making sure a return reflects the law that actually applies to it. The reason I am writing it down is that a retroactive bill signed in July creates a window where perfectly competent software and perfectly competent preparers can produce a return built on last year's assumptions, and nothing about that return looks wrong on its face.
Not sure your return reflects the new law?
A retroactive bill is exactly the kind of thing that produces a return that looks fine and costs you money. Bring me your last one and I'll tell you straight whether any of this moves your number.
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Read the articleFrequently asked questions
- Does the One Big Beautiful Bill Act apply to my 2025 tax return?
- Yes, most of it does. The law was signed in July 2025, but its core provisions are retroactive to January 1, 2025, so they apply to the return you file in 2026. That includes the higher standard deduction ($15,750 single, $31,500 married filing jointly, $23,625 head of household for tax year 2025), the permanent QBI deduction, and 100% bonus depreciation on qualifying property placed in service after January 19, 2025. A few pieces are not retroactive, most notably the new $2,000 Form 1099-NEC threshold, which does not start until payments made after December 31, 2025.
- Is the 20% QBI deduction permanent now?
- Yes. Section 199A was scheduled to expire after 2025, and the One Big Beautiful Bill Act made it permanent at 20%. It also widened the phase-in ranges for specified service businesses and added a minimum deduction for taxpayers with meaningful active business income. For a Florida S-Corp or LLC owner, this removes the single largest planning uncertainty of the last several years. You no longer have to structure around a deduction that might vanish, which changes how I think about entity choice and owner salary.
- What is the Section 179 limit now?
- The One Big Beautiful Bill Act raised the Section 179 expensing limit to $2.5 million, with the phaseout threshold starting at $4 million of property placed in service, effective for property placed in service after December 31, 2024, and indexed for inflation after 2025. For nearly every small business I work with, that ceiling is high enough that Section 179 is no longer the binding constraint. The practical question becomes whether to use Section 179 or 100% bonus depreciation, and they behave differently when a business has a loss year.
- Do I still have to send 1099s for payments under $600?
- For 2025 payments, yes, the old $600 threshold still applies to the forms you file in early 2026. The One Big Beautiful Bill Act raised the Form 1099-NEC and 1099-MISC filing threshold from $600 to $2,000, but only for payments made after December 31, 2025. So the change first affects the 1099s you issue in early 2027 for the 2026 year. This catches people out, because the headline says the threshold went up while the return in front of you still runs on the old rule.
- How does the no tax on tips deduction work for a business owner?
- It is a deduction, not an exemption, and it is temporary. For tax years 2025 through 2028 a taxpayer can deduct up to $25,000 of qualified tips, phasing out once modified adjusted gross income passes $150,000 ($300,000 filing jointly). If you are self-employed, the deduction cannot exceed your net income from the business in which the tips were earned. Payroll tax still applies, and the tips still have to be reported. If you run a restaurant or a salon in Central Florida, the reporting burden did not go away, only part of the income tax on it.
- What should a Florida small business owner actually do about this?
- Three things. First, make sure your 2025 return actually claims the retroactive pieces, because a return prepared on pre-OBBBA assumptions will quietly overstate your tax. Second, revisit any equipment purchase you deferred, since 100% bonus depreciation is permanent again and the Section 179 ceiling is now $2.5 million. Third, if you are an S-Corp owner, revisit reasonable compensation, because a permanent QBI deduction changes the math on where salary should sit relative to distributions. Florida has no state income tax, so every one of these moves is a straight federal saving.