Owning a small business is still the best tax deal in America.
The One Big Beautiful Bill just made it even better.
Whether it’s a $10K side hustle or $10MM business, the new opportunities for tax savings and wealth creation are next level.
Let’s walk through how it works -
The One Big Beautiful Bill just made it even better.
Whether it’s a $10K side hustle or $10MM business, the new opportunities for tax savings and wealth creation are next level.
Let’s walk through how it works -
In 2017, the TCJA created a massive gap:
Employees LOST their home office and misc deductions.
Business owners KEPT everything + got QBI.
The OBBB just made this gap permanent and wider.
If you’re still W-2, you’re playing the wrong game.
Here’s what you’re missing:
Employees LOST their home office and misc deductions.
Business owners KEPT everything + got QBI.
The OBBB just made this gap permanent and wider.
If you’re still W-2, you’re playing the wrong game.
Here’s what you’re missing:
Business Expenses -
Business income opens up an opportunity that W-2 employees don’t have - bonafide business expenses.
Direct costs are deductible, but many expenses exist in your life already. When you have business income, you get to buy before tax.
Business income opens up an opportunity that W-2 employees don’t have - bonafide business expenses.
Direct costs are deductible, but many expenses exist in your life already. When you have business income, you get to buy before tax.
Most employees have a home office they can’t deduct. A car that isn’t reimbursed.
Biz owners claim phone bills, home office, travel, education, and legal that would be spent regardless.
With 100% bonus depreciation back, that $80K truck for business? Write it all off year one.
Biz owners claim phone bills, home office, travel, education, and legal that would be spent regardless.
With 100% bonus depreciation back, that $80K truck for business? Write it all off year one.
Employment taxes -
Employment taxes are 15.3% - Save by opening an S-Corp and paying yourself a reasonable salary.
Taxpayers can bifurcate their employment from ownership and pay themselves salary, often saving thousands in employment taxes.
Employment taxes are 15.3% - Save by opening an S-Corp and paying yourself a reasonable salary.
Taxpayers can bifurcate their employment from ownership and pay themselves salary, often saving thousands in employment taxes.
Real numbers on employment tax savings:
$400K consultant:
- Sole prop: $32,507 in SE tax
- S-Corp ($150K salary): $11,475 in SE tax
- Annual savings: $21,032
That’s $210K over 10 years. Before we even talk about income tax.
$400K consultant:
- Sole prop: $32,507 in SE tax
- S-Corp ($150K salary): $11,475 in SE tax
- Annual savings: $21,032
That’s $210K over 10 years. Before we even talk about income tax.
Benefits -
SMB owners provide benefits for themselves including medical and retirement. Even better when the business is solo.
Solo 401k allows $69K+ in contributions. Stack that with permanent QBI deduction and you’re deferring massive amounts at low tax rates.
SMB owners provide benefits for themselves including medical and retirement. Even better when the business is solo.
Solo 401k allows $69K+ in contributions. Stack that with permanent QBI deduction and you’re deferring massive amounts at low tax rates.
Business Real Estate -
Own your real estate in your business or alongside.
Manufacturing facilities now get wild benefits: 100% expensing for the building PLUS a 35% investment tax credit.
Build a $10MM facility? Net cost after tax: ~$4.2MM.
Own your real estate in your business or alongside.
Manufacturing facilities now get wild benefits: 100% expensing for the building PLUS a 35% investment tax credit.
Build a $10MM facility? Net cost after tax: ~$4.2MM.
R&D Expensing -
From 2022-2024 you had to capitalize R&D over 5 years. Brutal for cash flow.
That’s over. 100% immediate deduction is back.
Software development, product improvements, research - all deductible when spent. Game changer for tech companies.
From 2022-2024 you had to capitalize R&D over 5 years. Brutal for cash flow.
That’s over. 100% immediate deduction is back.
Software development, product improvements, research - all deductible when spent. Game changer for tech companies.
QBI Deduction -
The 20% pass-through deduction was set to expire in 2025.
Now it’s permanent. Plus higher phase-outs: $75K single/$150K married (up from $50K/$100K).
Effective federal rate for many business owners: ~29.6%
W-2 at same income: 37%
The 20% pass-through deduction was set to expire in 2025.
Now it’s permanent. Plus higher phase-outs: $75K single/$150K married (up from $50K/$100K).
Effective federal rate for many business owners: ~29.6%
W-2 at same income: 37%
QSBS - The Ultimate Exit
Build a C-Corp and sell after 5 years = $0 federal tax.
Now: $15MM cap (was $10MM)
Asset limit: $75MM (was $50MM)
NEW: 50% exclusion at 3 years, 75% at 4 years
The best tax break in America just got 50% better.
Build a C-Corp and sell after 5 years = $0 federal tax.
Now: $15MM cap (was $10MM)
Asset limit: $75MM (was $50MM)
NEW: 50% exclusion at 3 years, 75% at 4 years
The best tax break in America just got 50% better.
Other opportunities:
- SALT cap raised to $40K (huge for NY/CA)
- Estate exemption $15MM made permanent
- Manufacturing gets 100% expensing + 35% credit
- Everything locked in - no more sunset anxiety
Congress just removed all the expiration dates.
- SALT cap raised to $40K (huge for NY/CA)
- Estate exemption $15MM made permanent
- Manufacturing gets 100% expensing + 35% credit
- Everything locked in - no more sunset anxiety
Congress just removed all the expiration dates.
Stacking these benefits:
$500K revenue consultant:
- S-Corp saves: $25K/year
- QBI deduction saves: $20K/year
- Business expenses: $15K/year
- Retirement contributions: $20K/year
Total: $80K/year in tax savings
= Extra $1MM+ over a decade
$500K revenue consultant:
- S-Corp saves: $25K/year
- QBI deduction saves: $20K/year
- Business expenses: $15K/year
- Retirement contributions: $20K/year
Total: $80K/year in tax savings
= Extra $1MM+ over a decade
Qualification -
This is only a brief overview of the concepts.
The rules are complex but greatly beneficial when properly applied. Dangerous when misapplied.
Seek qualified counsel in applying the principles and enjoy the savings.
This is only a brief overview of the concepts.
The rules are complex but greatly beneficial when properly applied. Dangerous when misapplied.
Seek qualified counsel in applying the principles and enjoy the savings.
Biggest mistakes I see:
- Waiting until “you’re bigger” to optimize
- Using TurboTax for business returns
- No separation between personal/business
- Missing deadlines (S-Corp election = March 15!)
- Not documenting major decisions
The stakes just got higher.
- Waiting until “you’re bigger” to optimize
- Using TurboTax for business returns
- No separation between personal/business
- Missing deadlines (S-Corp election = March 15!)
- Not documenting major decisions
The stakes just got higher.
Timing matters:
Bonus depreciation: Live now
R&D expensing: Retroactive to 2022 (amend those returns!)
QSBS $15MM: Only for stock issued after July 4, 2025
QBI permanent: No more planning around sunset
Every day you wait costs money.
Bonus depreciation: Live now
R&D expensing: Retroactive to 2022 (amend those returns!)
QSBS $15MM: Only for stock issued after July 4, 2025
QBI permanent: No more planning around sunset
Every day you wait costs money.
There you have it - tax savings is one of the best parts of being an SMB owner.
Make tax-advantaged income your entire career through write-offs and opportunities.
Sell your business at a lower tax rate.
The OBBB just made every part better.
Make tax-advantaged income your entire career through write-offs and opportunities.
Sell your business at a lower tax rate.
The OBBB just made every part better.
If you enjoyed this - go back up to the top and like/retweet it so more folks can see it.
Also go to my link in bio to find way more of my writing or to work with me.
Thanks for reading.
Also go to my link in bio to find way more of my writing or to work with me.
Thanks for reading.
Ready for more?
The great Roger Ledbetter and I are running office hours next Tuesday.
We read the entire Big Beautiful Bill so you don’t have to.
We will break it down and leak all the alpha.
Register even if you can’t attend and we share the cast.
lu.ma/yg5s3xti
The great Roger Ledbetter and I are running office hours next Tuesday.
We read the entire Big Beautiful Bill so you don’t have to.
We will break it down and leak all the alpha.
Register even if you can’t attend and we share the cast.
lu.ma/yg5s3xti
• • •
Missing some Tweet in this thread? You can try to
force a refresh
