A major feature of President Donald Trump’s “One Big Beautiful Bill Act” is the tax savings for businesses. Business owners should be aware of these potential tax savings and ensure that they take advantage of the bill’s business-related tax provisions. Call or visit your Boca Raton asset protection lawyer at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. today for more information about how the new federal tax law may impact your business.
Expansion of QSBS Election Benefits
Before the new bill, small business owners and investors meeting certain eligibility requirements could exclude up to 100% of their gain from selling or exchanging qualified small business stock (QSBS). The new bill expands QSBS election benefits for more businesses under Section 1202 of the Internal Revenue Code.
Under the new bill, the required holding period for partial gain exclusion decreases, and the eligibility thresholds increase. The newly revised QSBS election provision allows taxpayers to exclude 50% of gain after three years, 75% after four years, and 100% after five years. The lifetime gain exclusion cap also increases to $15 million per issuer from the current $10 million. Finally, the corporate asset threshold rises from $50 million to $75 million. The lifetime gain exclusion cap and the corporate asset threshold increases are both indexed for inflation beginning in 2027.
These changes improve QSBS treatment for some C corporations (C-corp) investments. In some cases, these changes may make C-corp status preferable to pass-through tax treatment.
Preservation of the QBI Deduction
The new bill preserves the 20% qualified business income (QBI) deduction. Again, had Congress not passed this provision, the QBI deduction would have expired at the end of 2025. The deduction, which permits a deduction of up to 20% of QBI, is available to some pass-through businesses, including sole proprietorships, partnerships, S corporations, and some trusts. Ultimately, the deduction reduces taxable income and the applicable marginal tax rate.
Furthermore, the new bill eases restrictions on the QBI for certain specified service trades or businesses (SSTBs). Eligibility is now gradually phased in.
The new bill reduces all itemized deductions by 2/37 of the lesser of the total itemized deductions or the amount of total taxable income beyond the top 37% tax bracket threshold. However, this provision is inapplicable to the QBI deduction for eligible pass-through entities.
Corporate Tax Rate Preserved
The new tax bill preserves the existing flat corporate tax rate of 21%. This provision avoids the reversion of the corporate tax rate to the previous 35% that existed before 2018.
Extension of 100% Bonus Depreciation
Under the new tax bill, the 100% bonus depreciation for qualified business property placed in service extends through 2029 instead of phasing out after 2026 under the previous law. The bonus depreciation increases business write-offs for equipment, technology, vehicles, and other capital purchases.
Increased §179 Expensing Provisions
The new bill permanently increases the §179 expensing deduction to a maximum of $2.5 million, as indexed for inflation. Using this increased limit, eligible businesses can deduct the full cost of qualified property. The phase-out threshold increases to $4 million, with a complete phase-out at $6.5 million. Both the deduction and phase-out threshold are indexed for inflation beginning in 2026. As a result, businesses will be eligible to expense a broader range of assets.
Relief for Domestic Research & Development (R&D) Expensing
The 2017 Tax Cuts & Jobs Act (TCJA) required that research & development (R&D) expenses be amortized over five years (within the U.S.) or 15 years (outside the U.S.). Under the new bill, businesses can continue to expense R&D in the country immediately through 2029.
Interest Deduction Relief Under §163(j)
The new bill expands the deductible limit for business interest expenses under §163(j). This expansion allows a larger number of businesses to deduct their business interest costs fully.
Advanced Manufacturing Investment Credit
Under the new bill, the rate for this tax credit increases from 25% to 35% for qualifying property placed into service after December 31, 2025.
Frequently Asked Questions (FAQ)
When does the expanded QSBS benefit election go into effect?
The changes to the QSBS benefit election apply to all QSBS shares issued after July 4, 2025.
What is QBI?
QBI is the net amount of income, gain, deduction, and loss from a qualified trade or business, including income from sole proprietorships, partnerships, S corporations, and certain trusts and estates.
What property is eligible for §179 expensing?
- 179 expensing applies to tangible personal property used in a business, off-the-shelf software, and qualified improvements to nonresidential real property.
Contact Us to Take Advantage of the New Federal Tax Law Benefits
A Boca Raton asset protection attorney at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can assist with the best means for protecting your business assets and structuring your business to take advantage of all available tax benefits. Call our office today at (954) 966-2112 or contact us online to set up a time to discuss your asset protection issues with our attorneys.