The 2025 tax overhaul—dubbed “Trump’s Big Beautiful Tax Bill”—includes major changes for small business owners and investors.
Passed by the Senate and House of Representatives and signed into law by the White House, this federal government-backed tax reform fulfills a key campaign promise and marks a significant update to the United States tax code.
Supporters are calling it ‘Trump’s Big Beautiful Bill for Small Business’ due to its sweeping provisions that benefit entrepreneurs, pass-through entities, and closely held companies.
If you run a C-corporation, S-corporation, partnership, or sole proprietorship, you’ll need to update your tax strategy to take full advantage of these permanent and retroactive provisions.
If you’re not paying attention, you could miss out on thousands in deductions and credits.
Key Business Tax Changes in the 2025 Bill
C-Corp tax rate remains at a flat 21%
Section 199A QBI deduction made permanent for pass-through entities
Bonus depreciation restored to 100%
Section 179 expensing limit extended to $2.5 million
QSBS capital gains exclusion expanded
New 100% R&D expensing, retroactive to 2022
Excess business loss limitation made permanent
SALT workaround for pass-through entities continues
1099 thresholds raised to reduce paperwork
Clean energy credits phasing out
Opportunity Zones extended with enhanced benefits
Watch the full breakdown here. Want to understand how these business provisions pair with the personal tax changes? Watch my companion video on the personal side of the Big Beautiful Bill—I cover the new child tax credit, standard deduction increases, and more.
C-Corporation Tax Rate Still at 21%
The corporate tax rate for C-corporations remains untouched at 21%. Originally lowered under the 2017 Tax Cuts and Jobs Act, this flat rate continues to make the C-Corp structure attractive for high-growth businesses and long-term planning. There’s no sunset clause or expiration date—this rate is here to stay.
Section 199A Deduction Made Permanent
Small business owners who operate as sole proprietors, S-Corps, or partnerships can now permanently deduct 20% of their Qualified Business Income (QBI) under Section 199A. So if you earn $100,000 in net income, you’ll only pay taxes on $80,000 after applying the 20% deduction.
Specified service businesses like legal, medical, and accounting firms face income-based phaseouts. In 2025, these phaseouts begin at $197,000 (single) or $394,000 (married filing jointly). Planning opportunities exist—like using a C-Corp to shift income away from the personal return.
Bonus Depreciation: Back to 100%
This is a game-changer for real estate and capital-intensive businesses. The new law lets you deduct the full cost of assets with a useful life of 20 years or less in the same year you put them into service. This 100% bonus depreciation under Section 168(k) gives you a major upfront tax break. Previously reduced to 40% for 2025, the new law restores 100% bonus depreciation.
Cost segregation studies are now even more powerful. Investors can potentially write off up to 90% of a property’s purchase price in year one.
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Section 179 Expensing Limit Increased
Section 179 offers targeted tax relief by allowing businesses to expense qualifying property rather than depreciate it over time.
This tax-exemption strategy is especially beneficial for those who itemize deductions and want immediate savings.
Businesses can now deduct up to $2.5 million in qualified equipment and software purchases under Section 179, phasing out at $4 million. Unlike bonus depreciation, Section 179 cannot create a loss. Use this provision when your income justifies the write-off.
Qualified improvements, vehicles over 6,000 lbs, and even off-the-shelf software may qualify.
Qualified Small Business Stock (QSBS) Exclusion
QSBS provisions were expanded significantly:
Up to $15 million in capital gains can be excluded
Partial exclusions begin at 3 years (50%) and phase to 100% at 5 years
Applies only to C-Corp stock and businesses under $50 million in assets
If your goal is to build and exit, this is one of the most powerful long-term tax strategies available.
100% R&D Expensing (Retroactive to 2022)
Domestic research and development costs are now fully deductible in the year incurred, rather than over five years. This change is retroactive to 2022, and businesses may amend previous returns to claim refunds.
If you’ve been building software, hiring engineers, or investing in product development, now is the time to revisit your filings.
Excess Business Loss Limitation: Now Permanent
This rule caps how much of your business losses you can use each year, but it helps block strategies that use large losses to avoid paying the alternative minimum tax. Be sure to assess whether you’re optimizing your deductions and interest deduction strategies.
The excess business loss rule caps how much pass-through losses you can use to offset non-business income like wages, interest, or dividends.
For 2025:
Single filer cap: $313,000
Married filing jointly: $626,000
Any unused losses carry forward, but only 80% of future income can be offset. Real estate pros and high-loss operators should assess whether a C-Corp structure offers better tax leverage.
SALT Deduction Workaround for Entities
This workaround is especially important if you itemize deductions and want to avoid the $10,000 SALT cap on your personal return. By leveraging the entity-level election, you can enhance your overall tax relief across both business and personal filings.
Individuals can still only deduct up to $10,000 in State and Local Taxes (SALT), but pass-through entities have a workaround. When your business elects to pay state taxes at the entity level, it can deduct the full amount. This lowers the taxable income passed through to you as the owner, resulting in a lower personal tax bill.
If you’re in a high-tax state like California or New York, this could save thousands.
1099 Thresholds Increased
Good news for compliance: the 1099 thresholds were raised to reduce paperwork for small businesses.
1099-K (PayPal, Stripe): now required only if $20,000+ and 200+ transactions
1099-NEC/MISC: threshold increased from $600 to $2,000
This reduces the administrative burden and unnecessary reporting.
Energy Tax Credits Phasing Out
Several energy-related tax incentives are being eliminated or significantly reduced:
EV tax credits expire after September 30, 2025
Residential and rental solar installation credits expire December 31, 2025
Energy-efficient building deductions (45L and 179D) are restricted or eliminated
If you’re planning solar, EV purchases, or green upgrades—2025 is your last shot.
Opportunity Zones Extended and Improved
Opportunity Zones are now permanent. Capital gains rolled into qualified opportunity zone funds can defer and reduce taxes. The new law:
Brings back step-ups in basis at 5, 7, and 10 years
Adds rural opportunity zones with a 30% step-up after 5 years
Reduces improvement requirements from 100% to 50% in rural zones
Plan your exit and holding strategy carefully. These zones remain one of the most powerful tools for capital gains deferral and elimination.
New Markets Tax Credit and Corporate Giving
The New Markets Tax Credit is now permanent, offering credits to investors who fund developments in low-income areas.
Corporate charitable deductions remain capped at 10% of income, but the first 1% is no longer deductible. That means you must give over 1% of your net income to start receiving deductions.
Other Employer Incentives
Several credits designed to attract and retain employees are now permanent:
Childcare Credit: 25% of up to $500,000/$600,000 in employer-paid care
Paid Family & Medical Leave Credit: Up to 25% of wages paid
Student Loan Repayment: $5,225 per employee is now tax-free
These can enhance your compensation package and reduce employer tax liability.
What You Should Do Now
The 2025 tax overhaul offers immense opportunities—and some hidden traps. Whether you’re a landlord, entrepreneur, or investor, you need to revisit your structure, strategy, and spending.
Revisit your entity choice: S-Corp vs. C-Corp vs. LLC
Run the numbers on QSBS, R&D credits, and bonus depreciation
Review your income thresholds for QBI and SALT deductions
Move quickly on solar, EVs, and energy upgrades before 2025 ends
Whether you’re a real estate investor, business owner, or high-income professional, you can’t afford to leave deductions, credits, and structural advantages on the table.Schedule a free Strategy Session with Anderson’s tax team to create a personalized plan. We’ll work with you to build a multi-year custom roadmap that evaluates every tax reduction strategy available—guaranteed to help you save more.
