What Small Business Owners Need to Know About the “One Big Beautiful Bill”

Maybe you’ve caught wind of something called the “One Big Beautiful Bill” in headlines or small business circles lately. With a name that sounds more like a marketing campaign than legislation, it’s understandable to wonder what this bill is and whether it matters to you as a small business owner.

Spoiler alert: It does.

Whether you run a boutique marketing company, a coffee shop, or an online retail store, the One Big Beautiful Bill (OBBB) Act could change how you operate, reinvest in your business, and pay employees. Below, we’ll break down the impact of the One Big Beautiful Bill for small businesses so you can make informed decisions.

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What is the “One Big Beautiful Bill”?

The One Big Beautiful Bill Act, formally known as H.R. 1, is (as the name suggests) a big one. Signed into law in July 2025, it’s a piece of legislation from the U.S. federal government that pulls together changes across a bunch of areas, including tax policy, healthcare, labor laws, environmental rules, and more. Think of it as a legislative “bundle deal” that addresses different policy areas together rather than as separate bills.

There are many provisions—or rules—in the One Big Beautiful Bill Act. But for small business owners, the tax changes are where it really hits home. Let’s walk through how this bill could affect your day-to-day operations, and what steps you might want to take next.

Key tax changes in the OBBB

A lot of folks are talking about the impact of the One Big Beautiful Bill Act on individual income tax, capital gains, the standard deduction, and tax credits. But the OBBB is also packed with changes to the tax code that could have real consequences for how small businesses plan, spend, and report income. Here are the key tax cuts and other updates you should know about, and how they might impact your business.

Qualified business income (QBI) deduction stays put

The QBI deduction is now permanent. This tax break lets owners of pass-through businesses (sole proprietors, partnerships, limited liability companies (LLCs), and S corporations) deduct up to 20% of business income from their personal tax return. It essentially keeps lower tax rates around for pass-through businesses, since the Tax Cuts and Jobs Act permanently lowered the tax rate for corporations.This deduction was set to disappear at the end of 2025, so keeping it around gives you more stability in your tax planning. Just know that there are still strict income limits and industry-specific rules, so it’s a good idea to discuss this with your tax advisor each year.

Immediate deduction for research and development (R&D) expenses

Previously, businesses had to spread out deductions for research and development expenses over five years. Now, you can deduct those expenses all at once, and even amend your returns for the 2022-2024 tax years to apply claim deductions retroactively if your business has under $31 million in receipts.

If you’re making investments, such as developing new products, systems, or tech, this change can give your cash flow a much-needed boost. Be sure to discuss the possibility with your tax advisor.

100% bonus depreciation is back

Thinking about a big purchase, like new equipment, vehicles, or software? The OBBB brings back 100% bonus depreciation, meaning you can write off the full cost of qualifying assets in the year you buy them as long as you start using them in the business (i.e., “place them in service) right away.

Bonus depreciation had been phasing out—it was going to be just 40% for 2025, 20% for 2026, and 0% for 2027. If you’re considering a large purchase, this could be a smart time to do it.

Higher equipment deduction limits

Section 179 is another way for taxpayers to deduct the cost of equipment, but with different rules and limits. The OBBB raises the Section 179 limit from $1 million to $2.5 million, with a phase-out kicking in if you put more than $4 million of property into use.

One key difference between bonus depreciation and Section 179: Section 179 can’t create a loss on your tax return, while bonus depreciation can. Be sure to talk to your tax advisor about which option is better for your situation. In some cases, it makes sense to use both.

1099-K reporting thresholds go back up

Worried about those 1099-K forms from PayPal, Square, or Venmo? The OBBB rolls back the reporting threshold to $20,000 and 200 transactions. It had been lowered to $5,000 and was supposed to drop to just $600. This is a big win for small business owners and side hustlers who might have suddenly noticed an influx of tax forms.

Fewer surprise forms mean less paperwork. But keep in mind that all business income is taxable, even if you don’t receive a form.

Higher reporting thresholds for 1099-NEC and 1099-MISC

Starting from the 2026 tax year, you only need to issue 1099-NEC and 1099-MISC forms if you pay a contractor or vendor $2,000 or more (up from the current $600 threshold).

It’s an especially helpful update for gig transactions. It means fewer forms to deal with, but be sure to keep solid records in the meantime, in case the IRS comes knocking—especially for payments made before the change kicks in next year.

Permanent tax breaks for paid leave and student loan assistance

Two popular employer tax perks are now here to stay:

Paid Family and Medical Leave is a credit for businesses that offer paid leave to their employees.
The student loan repayment exclusion lets you contribute up to $5,250 a year toward an employee’s student loans tax-free.

If you’ve been on the fence about offering these benefits, this might be the incentive you’ve been waiting for.

Higher tax-free limits for childcare assistance

Starting in 2026, employees can contribute up to $7,500 to dependent care flexible spending accounts (FSAs). That’s up from the current $5,000 limit.

If you offer a cafeteria plan or similar benefit, check with your provider about updating those limits so your team can take full advantage.

Stay informed without the stress

These changes are a lot to take in when you’re busy running a business. But you don’t need to master every detail overnight. What you do need is awareness and a plan. So start by scheduling a check-in with your accountant or tax advisor. They can help you explore how the One Big Beautiful Bill Act may apply to your business over the next four years and beyond

One of the easiest ways to stay organized and ready for tax season is to use accounting software that’s built for small businesses.
FreshBooks helps you track income, expenses, and contractor payments in real time so you’re not scrambling when tax deadlines roll around. Tax laws may change, but your ability to prepare doesn’t have to.