Tax Strategy · Volume 3 + Volume 11

The One Big Beautiful Bill Act: What Small Business Owners Need to Know

By Mark Stetler & Mason Stetler · July 2026 · 10 min read

The One Big Beautiful Bill Act (OBBBA), signed in 2025, is the most significant federal tax and fiscal legislation since the Tax Cuts and Jobs Act of 2017. Its provisions affect individual income taxes, business structures, estate planning, charitable deductions, and more — with several provisions that directly affect small business owners' planning decisions for 2025, 2026, and beyond.

This article focuses on the small business provisions. For your full picture, work with your CPA — the interactions between provisions are significant and individual-specific.

A client called me in late 2025 asking whether it made sense to accelerate the asset purchase she'd been planning for early 2026. I didn't have a good answer until I read the OBBBA bonus depreciation provision. It did. The federal bonus depreciation rules restored under OBBBA meaningfully changed the calculation for the timing of major asset purchases. Two months later, she'd bought the equipment she needed in 2025 rather than waiting, and the tax benefit was substantial. That conversation would have gone differently without the OBBBA context.

Bonus Depreciation Restored

One of the most practically significant OBBBA provisions for small businesses is the restoration of 100% bonus depreciation for qualified property placed in service after a certain date.

Under prior law (the Tax Cuts and Jobs Act of 2017), 100% bonus depreciation began phasing down: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, then zero. Many small business owners had planned capital purchases around this phase-down.

The OBBBA reversed this. 100% bonus depreciation has been restored, allowing businesses to immediately deduct the full cost of qualifying property in the year it's placed in service rather than depreciating it over the asset's useful life.

What this means: If you're planning to purchase equipment, machinery, vehicles (subject to limitations), or other qualifying property, the timing of that purchase has changed relative to what pre-OBBBA planning suggested. The first-year tax deduction is now back to full cost for qualifying property.

The Section 179 small business expensing limits were also increased under OBBBA, providing additional immediate deduction capacity for businesses that don't qualify for full bonus depreciation on certain properties.

Qualified Small Business Stock (QSBS) Enhanced

The OBBBA enhanced the Section 1202 Qualified Small Business Stock exclusion, which allows eligible shareholders of qualifying C-corporations to exclude up to 100% of capital gains on the sale of QSBS from federal income tax.

Under prior law, QSBS excluded up to 100% of gains for stock acquired after September 27, 2010, held for more than five years, in a qualifying corporation with assets of $50 million or less at the time of issuance.

The OBBBA increased the asset limit for qualifying corporations and made other adjustments that expand the pool of businesses and transactions eligible for the exclusion. If you're currently operating as an LLC or S-corp and have plans to sell within the next 3–7 years, the QSBS analysis may now favor converting to a C-corporation — the conversion starts your five-year holding clock, and the tax savings on sale can be extraordinary for a business that appreciates significantly.

J.P. Morgan and other planning resources specifically flagged QSBS as a priority planning consideration for business owners in 2026. If you're thinking about exiting in the next 5–10 years and haven't had a QSBS conversation with your attorney and CPA, that conversation needs to happen now.

Charitable Deduction Changes

The OBBBA includes changes to charitable deduction limitations that affect business owners who use charitable giving as part of their planning. Specifically, changes to itemized deduction limitations will affect taxpayers who regularly donate. The changes take effect in 2026, making 2025 the last year under the prior charitable deduction framework for many taxpayers.

For business owners who regularly make substantial charitable gifts and itemize deductions: if you've been considering creating a Donor-Advised Fund (DAF) and front-loading future years' charitable contributions, the window to do so under prior rules was 2025. If you haven't done this and are a significant charitable giver, the analysis for 2026 and beyond deserves attention.

Pass-Through Business Deduction (Section 199A) Extended

The Section 199A qualified business income (QBI) deduction — which allows owners of pass-through businesses (S-corps, LLCs, sole proprietorships) to deduct up to 20% of qualified business income — was scheduled to expire after 2025 under the TCJA. The OBBBA extended it permanently.

For most small business owners operating as pass-throughs, this deduction has been a significant tax benefit since 2018. The extension removes the planning uncertainty that surrounded the 2025 sunset date.

The 20% deduction remains subject to the same income limitations and qualified trade or business rules as under prior law. High-income owners in specified service trades or businesses (SSTBs — law, health, financial services, etc.) face phase-out ranges; these apply under the extended provisions.

Estate and Gift Tax Provisions

The OBBBA made permanent the elevated estate and gift tax exemption from the TCJA (approximately $14 million per individual, $28 million per married couple in 2025 dollars, indexed for inflation). Under prior law, this was scheduled to sunset after 2025 to roughly $7 million per individual.

For business owners with estates that might trigger estate tax at lower exemption levels, the OBBBA change reduces urgency on certain wealth transfer strategies that were being accelerated to beat the 2025 sunset. That said, existing plans that are already in motion should generally continue — strategies put in place under the elevated exemption are not being clawed back by the IRS for gifts made before the extended provisions.

What to Do With This Information

The OBBBA is comprehensive legislation with many interacting provisions. Individual impacts depend on your entity structure, income level, asset plans, and succession timeline. A few near-term action items worth discussing with your CPA and attorney:

If you're planning major asset purchases, revisit the bonus depreciation analysis under the restored 100% rate
If you're considering a business sale in the next 5–10 years, have a QSBS eligibility conversation now
Review your business structure in light of the QSBS changes, especially if currently operating as an S-corp
If you're a charitable giver with plans to itemize, understand how the 2026 deduction changes affect your giving strategy

The OBBBA isn't just background noise — for many small business owners, it changes specific planning decisions in material ways.

Volume 3 of The Million Dollar Highway covers tax strategy for small business owners. Volume 11 covers business exit planning and sale structure.

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This article is educational and does not constitute legal or tax advice. The OBBBA is complex legislation with numerous provisions not covered here. Work with a qualified CPA and attorney for guidance specific to your situation.