The Big Beautiful Bill is out - and while it still needs to be worked on before moving for a vote, here are some key provisions:
QBI from 20% to 23%
This is a big move for small business as this was set to expire
It equates to a ~9-10% impact on taxes due on pass-through businesses
This is a big move for small business as this was set to expire
It equates to a ~9-10% impact on taxes due on pass-through businesses
Lifetime Gift Tax Exemption
Set to $15 million
Currently at $13.99 million, was set to go to $7 million January 2026
Big win for high net worth individuals
Set to $15 million
Currently at $13.99 million, was set to go to $7 million January 2026
Big win for high net worth individuals
Still no Miscellaneous Itemized Deductions
Employees still can't deduct many out-of-pocket costs they used to be able to pre-2017
And the Pease limitation looks like it's back
Employees still can't deduct many out-of-pocket costs they used to be able to pre-2017
And the Pease limitation looks like it's back
No Tax on Tips
In the form of a deduction through 2028
Must be "traditionally and customarily" tip-receiving business prior to 12/31/24 (list forthcoming)
Not for "highly compensated employees"
In the form of a deduction through 2028
Must be "traditionally and customarily" tip-receiving business prior to 12/31/24 (list forthcoming)
Not for "highly compensated employees"
No Tax on Overtime
In the form of a deduction
Not for "highly compensated employees"
In the form of a deduction
Not for "highly compensated employees"
No Tax on Social Security
In the form of an additional $4,000 deduction for seniors
Phases out as income increases over $150,000 (MFJ)
In the form of an additional $4,000 deduction for seniors
Phases out as income increases over $150,000 (MFJ)
No Tax on Car Loan Interest
Additional deduction through 2028 capped at $10,000
Phases out as income increases over $200,000 (MFJ)
Final assembly must be in the US
Additional deduction through 2028 capped at $10,000
Phases out as income increases over $200,000 (MFJ)
Final assembly must be in the US
Bonus Depreciation to 100%
Placed in service Jan 19, 2025 through before Jan 1, 2030
Placed in service Jan 19, 2025 through before Jan 1, 2030
R&D Expensing (Repeal 174)
Only applies to domestic R&D expenditure
For costs between Jan 1, 2025 and Jan 1, 2030
Only applies to domestic R&D expenditure
For costs between Jan 1, 2025 and Jan 1, 2030
Interest Expense Deduction - Add Back Depreciation
From Jan 1, 2025 through Dec 31, 2029
This is a big win to be teamed up with bonus depreciation
Especially with higher interest rates
From Jan 1, 2025 through Dec 31, 2029
This is a big win to be teamed up with bonus depreciation
Especially with higher interest rates
New 100% Bonus for Qualified Production Property
Property used for manufacturing, production, refining of any tangible personal property
Basically factories = gas stations
Property used for manufacturing, production, refining of any tangible personal property
Basically factories = gas stations
OZ Extensions
2026 is still an income inclusion year
But 2033 is the next wave of OZ deferral inclusion year
Lot of other details here - follow the OZ experts
2026 is still an income inclusion year
But 2033 is the next wave of OZ deferral inclusion year
Lot of other details here - follow the OZ experts
179 Deduction Limitations Increased
From $1,000,000 to $2,500,000
Phaseout begins after $4,000,000 (from $2,500,000)
From $1,000,000 to $2,500,000
Phaseout begins after $4,000,000 (from $2,500,000)
Small Manufacturing Business Tax Break
Now considered "small" if gross receipts < $80,000,000
Eligible for cash basis, no 263(a), etc.
A big win for small manufacturers - effective after Dec 31, 2025
Now considered "small" if gross receipts < $80,000,000
Eligible for cash basis, no 263(a), etc.
A big win for small manufacturers - effective after Dec 31, 2025
Limitation on Amortization of Sports Franchises
Subject to 50% of basis of intangibles for amortization
Subject to 50% of basis of intangibles for amortization
SALT Cap
$30,000 for MFJ that phases out after $400,000 in income
Floor of $10,000 for MFJ
$30,000 for MFJ that phases out after $400,000 in income
Floor of $10,000 for MFJ
Excise Tax on College Endowments
Ranging from 1.4% to 21% depending on size of enrollment and "student-adjusted endowment"
Ranging from 1.4% to 21% depending on size of enrollment and "student-adjusted endowment"
Debt Limit to Increase by $4T
That's the line...
That's the line...
This bill is 389 pages and has a lot more than this
And this is sure to be hotly debated and adjusted - but it's good signal on where we're headed
And this is sure to be hotly debated and adjusted - but it's good signal on where we're headed
If you enjoy these kinds of tax takes (and other small business angles) follow me for longer-form posts here: plug-newsletter.kit.com
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