• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube
Big Ideas for Small Business logo

Barbara Weltman

Big Ideas for Small Business, Inc.

Whitepaper download

Subscribe and download our eBook, "150+ Tax Deductions for Small Business A to Z."

This field is hidden when viewing the form
Get the:

  • Home
  • About Us
  • Big Ideas For Your Business
    • Idea Of The Day ®
    • SMB Legal
    • SMB Taxes
    • SMB Financial
    • Small Business
    • Newsletter Archive
  • Services
  • Books
  • Blog
  • Multimedia
    • Videos
    • Radio Shows/Podcasts
  • Be a Guest Blogger

Preview of Tax Changes this Year: Actions to Take Now

June 5, 2025 / By Barbara Weltman

Preview of Tax Changes this YearOn May 22, 2025, the House passed One Big Beautiful Bill Act (H.R. 1) (referred to here as “the bill”), which is a reconciliation bill including legislation from 11 House Committees…including the Ways and Means Committee for taxation. The Senate now has to address the measure, with a target date for enactment by Congress set at July 4th. While the bill that passed the House may be changed in the Senate so that a final bill could look somewhat different than it does now, it’s not too early for small business owners to begin thinking about what opportunities from pending legislation they can use this year. The following won’t get into details (that will happen when there’s a final bill because of possible changes) but is designed to get you thinking about actions to take now.

Overview

Many of the tax breaks under the Tax Cuts and Jobs Act of 2017 are set to expire at the end of 2025. The bill would extend and make permanent many of these breaks, such as the current tax brackets for individuals. Others, such as tax deferral for investments in Opportunity Zones, would be extended for a limited time.

Equipment purchases

Do you need to replace old machinery and equipment. Do you need new items? Tax law changes, if enacted, could essentially reduce your out-of-pocket costs due to favorable tax changes.

  • Bonus depreciation. The bill would set bonus depreciation at 100% for purchases placed in service after January 19, 2025. This means the cost of qualifying equipment is immediately deductible; claiming depreciation over a number of years won’t be required. The bill also introduces a special write-off for qualified production property used in agricultural or chemical production.
  • First-year expensing. The bill would increase the dollar limits on the Section 179 deduction for property bought and placed in service after 2024.

Remember that both bonus depreciation and first-year expensing apply whether you finance the purchase in whole or in part. If you don’t have the cash on hand for a purchase, check with the vendor to see if financing is available.

R&D

Does your business engage in research and experimentation? Costs for R&D after 2024 would be expensed rather than deducted ratably over 5 years. The expensing option would be only for a limited number of years.

QBI deduction

Are you an owner of a pass-through entity? You may get a larger QBI deduction for 2025 and beyond. Instead of the 20% deduction that’s been in place since 2018 and was set to expire at the end of 2025, the bill would increase the deduction to 23% starting in 2026 and make it permanent. The bill would also make changes to some other rules for the QBI deduction. One change for 2025 would be excluding amounts related to the new tips deduction from QBI.

SALT cap

Do you pay a lot when it comes to your personal state and local taxes? This may include state income taxes on your business profits from a pass-through entity. The bill would increase the SALT cap from the current $10,000 to $40,000, starting in 2025. At the same time, it would eliminate the benefit of deductions for state-level pass-through entity taxes (PTETs) for partners and S corporation shareholders, effective for 2025 and beyond.

Changes related to tips and overtime

There are two measures to watch with respect to tips:

  • Employer credit for taxes on tips. Employers in the food and beverage industry currently have a tax credit for Social Security taxes on tips. The bill would extend this break to employers in the beauty service industry (e.g., hair salons, barbershops, nail salons) beginning in 2025.
  • No tax on tips. The deduction that employees could claim on their tips could be retroactive to January 1, 2025.

No tax on overtime. The deduction that employees could claim on overtime could also be retroactive to January 1, 2025.

What to do: While the no tax on tips and overtime are tax breaks claimed by employees on their personal returns, employers will have new reporting on W-2s. Employers may want to begin to update their recordkeeping for W-2 purposes so they’re ready for reporting in 2026. And employees may want to submit new W-4s to adjust their income withholding if these deductions apply to them. But there is no change for employers when it comes to income tax withholding and FICA taxes.

End to some green energy breaks

The bill would end tax credits for certain green energy actions. For example, the tax credit for buying a previously-owned EV or a commercial EV would apply only through 2025. Similarly, the alternative fuel refueling property credit (the credit applicable for installing a charging station) would also end after 2025. If you want to buy a used EV or a commercial EV or install a charging station, you might want to do it soon…before the end of this year. Note: The credit for a new EV would run only through 2026.

If you are a home builder, the credit for new energy efficient homes would also end this year. Projects underway before 2026 may squeak by.

What’s not in the bill?

The bill does not extend the work opportunity credit for hiring employees from certain targeted groups (e.g., long-term unemployed; ex-felons). It is set to expire at the end of 2025. If you’re hiring, keep this tax-saving benefit in mind. The credit applies for an eligible employee who begins work by December 31, 2025. Of course, this credit could be extended by the Senate and included in a final bill.

Currently, the cap on the deduction for startup costs for the first year is $5,000. Shopify found that the average amount of startup costs is $40,000. Previously proposed bills would have increased the limit to $20,000 (four times the current limit) to as high as $50,000, but none of the proposals were included in H.R. 1.

The bill does not lower the corporate tax rate for manufacturers, as had been proposed.

What to do now?

If the bill is enacted and these and other favorable tax breaks would lower your 2025 tax bill, you probably want to adjust your remaining estimated tax payments for 2025. Why overpay your taxes and have to wait for a refund when you file your return in 2026?

Final thought

Once the bill is enacted, details of specific measures will be covered in future blogs. Stay in touch with your CPA or other tax adviser to learn which changes apply to you and what to do to take advantage of them.

Additional information concerning tax law and small business can be found in this list of blogs.

Tags business-related tax changes tax law tax legislation Taxes

Primary Sidebar

Categories

  • General Business (498)
  • Guest Blog (110)
  • Homepage (23)
  • Small Business (993)
  • SMB Financial (324)
  • SMB Legal (66)
  • SMB Taxes (325)

Barbara’s Recent Posts

  • 9 Smart Financial Decisions for Business Owners in Retirement June 6, 2025
  • Preview of Tax Changes this Year: Actions to Take Now June 5, 2025
  • Becoming Penniless: What Does this Mean for Your Business? June 3, 2025
  • Scale Your Business by Stepping Up IP Protection May 29, 2025
  • Disasters Happen: It’s Important to Be Prepared Now May 27, 2025
  • How Work Order Software Transforms Small Business Operations May 26, 2025
  • The Numbers Are Up for Sole Proprietorships May 22, 2025
  • New Business or Project Crowdfunding: What To Know May 20, 2025
  • Old-School Estimating vs. Smart Solutions: What’s Really Holding You Back? May 19, 2025
  • Employees Getting Called to Public Service: What to Know May 15, 2025
  • Not Too Late to Prep for Summer Now May 13, 2025
  • How Will the Next Generation of Learners Affect the Workplace May 12, 2025
Awarded Top 100 Small Business Blog medal (link will open in a new window or tab)
Marquis Who's Who 2023 Badge
Top Small Business Blogs (Link will open in a new window or tab.)
8 Financial blogs small business Owners Need to Read. Invoice home.  (link will open in a new window or tab)
Best Small Business Blog, Expertido.org
Top 50 Small Business Blogs 2018
Best Small Business Blogs
BizHumm Top 100 Business Blog Award to Barbara Weltman
FitsSmallBusiness.com: Award for Best Small Business Blog 2017 (link will open in a new window or tab)
FitsSmallBusiness.com: Award for Best Small Business Blog 2016 (link will open in a new window or tab)

Footer

Big Ideas for Small Business logo

Small business ideas, business tax news and small business consulting from Barbara Weltman to provide business owners with the information they need to succeed. Visit our small business blog, Idea of The Day®, small business books and articles on small business taxes, small business finance and small business legal advice.

Contact Us

[email protected]

(772) 492-9593

gacor maxwin situs slot thailand terpercaya situs slot gacor situs gacor akun pro thailand slot bandar togel terpercaya

Latest Tweets

bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
June 5

ChatGPT introduces meeting recording and connectors for Google Drive, Box, and more | TechCrunch https://tcrn.ch/43ZMoMl #chatGPT #smallbusiness #techupdates

Reply on Twitter 1930746536327049480 Retweet on Twitter 1930746536327049480 Like on Twitter 1930746536327049480 Twitter 1930746536327049480
bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
June 5

Demographics Matter Most https://bit.ly/44OEUg7 #business #demographics

Reply on Twitter 1930701301039391157 Retweet on Twitter 1930701301039391157 Like on Twitter 1930701301039391157 Twitter 1930701301039391157
bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
June 5

Need some expert help with your website? Try website development services by freelance web developers | Fiverr https://bit.ly/3ZNRzwq #projectwork #webdevelopers #freelance

Reply on Twitter 1930689859238179212 Retweet on Twitter 1930689859238179212 Like on Twitter 1930689859238179212 Twitter 1930689859238179212
Load More

Copyright © 2008–2025 Big Ideas for Small Business, Inc  |  Designed by Hudson Fusion

  • Privacy Policy
  • Sitemap