Tax Changes Business Owners Should Know

The One Big Beautiful Bill Act (OBBBA) introduced notable tax changes for business owners. From making the Qualified Business Income (QBI) deduction permanent to expanding bonus depreciation and raising limits on state and local tax (SALT) deductions, the rules may create financial planning considerations but also add layers of complexity.  

Here are five key tax changes every business owner should understand to better understand potential implications and planning considerations. 

1. Qualified Business Income Deduction (Section 199A) 

Owners of sole proprietorships, partnerships, S corporations, and certain LLCs may be eligible for the QBI deduction, also known as the Section 199A deduction. The legislation makes the QBI deduction permanent, while maintaining existing income thresholds, phaseouts, and other limitations. 

The QBI deduction, equal to 20% of QBI, generally will phase out or be limited if taxable income exceeds certain thresholds and may be subject to additional wage, property, and business-type limitations.  

For 2026 (amounts subject to IRS adjustment): 

• $403,500-$553,500 for married filing jointly  

• $201,750-276,750 for all other filers 

For example, a married couple filing jointly in 2026 may be eligible to claim the full QBI deduction, subject to applicable rules, if the couple’s taxable income is below $403,500. The deduction begins to phase out above that level.  

Also starting in 2026, a new minimum $400 QBI deduction applies to taxpayers with at least $1,000 in QBI from businesses in which they materially participate, subject to statutory requirements. These amounts will adjust for inflation. 

2. 100% Bonus Depreciation  

The legislation generally allows a 100% first-year deduction for certain qualifying property, such as equipment or machinery, in the year it is placed in service, subject to eligibility requirements and acquisition timing rules. This treatment is available for certain property acquired after January 19, 2025 and may not apply to all assets or situations. 

3. Enhanced Section 179 Expensing 

Section 179 of the Internal Revenue Code (IRC) allows businesses to deduct the cost of qualifying tangible property, computer software, and certain improvements to nonresidential buildings (including roofs, HVAC systems, and security systems) in the year of purchase, subject to limitations and eligibility requirements. 

In 2026, the maximum section 179 expense deduction is $2,560,000. The maximum section 179 expense deduction for sport utility vehicles placed in service in tax years beginning in 2026 is $32,000. 

The deduction phases out when the cost of property placed in service during the year exceeds an established phaseout threshold of $4,090,000, and overall deductibility may depend on taxable income and other factors.  

4. Qualified Small Business Stock (QSBS) 

Qualified Small Business Stock (QSBS) provides tax incentives for investing in certain small businesses that meet statutory requirements. OBBBA introduces several updates for stock issued after July 4, 2025: 

• The asset limit for a corporation to qualify as a small business increased from $50 million to $75 million (adjusted for inflation). 

• To qualify for exclusion of gain, investors generally must hold shares for specified periods, with: 

• 50% exclusion for shares held at least three years 

• 75% exclusion for shares held at least four years 

• 100% exclusion for shares held more than five years 

• The maximum excludable gain increased to $15 million ($7.5 million if married filing separately), subject to applicable caps and requirements. 

Certain industries are ineligible, including professional services, finance and investment services, banking, insurance, restaurants, and mining, and additional eligibility requirements apply. 

5. State and Local Tax (SALT) Deduction 

Since 2018, the law has capped itemized deductions for state and local property taxes and state and local income taxes at $10,000 ($5,000 if married filing separately). This limit has presented a particular challenge for many small business owners. 

The legislation temporarily raises the cap on the SALT deduction to $40,400 in 2026 ($20,200 if married filing separately), subject to annual adjustments and applicable thresholds. 

The $40,400 cap begins to phase out for taxpayers with modified adjusted gross income above $505,000 in 2026 ($252,500 if married filing separately). These thresholds adjust for inflation in later years, and regardless of income, the deduction will not fall below $10,000 ($5,000 if married filing separately). 

The benefit of the SALT deduction depends on individual circumstances, including whether a taxpayer itemizes deductions. 

In 2030, the SALT cap will return to $10,000. 

What’s Next? 

OBBBA introduces tax changes, from making the QBI deduction permanent to boosting depreciation and QSBS incentives, each of which may have different impacts depending on a taxpayer’s facts and circumstances.  

Business owners may consider reviewing these updates with their professional advisors to evaluate how they may apply to their situation. 

If you have questions about how the One Big Beautiful Bill Act may impact you, reach out to your Savant advisor. 

This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment or tax advice from Savant. Please consult your investment or tax professional regarding your unique situation.