What the One Big Beautiful Bill Means for Small Business Owners

By Andrew Bosshard, Business Law Attorney

The One Big Beautiful Bill Act, signed into law on July 4, 2025, includes several changes to federal tax law that directly affect small business owners. These provisions apply to pass-through entities, equipment purchases, and startup investments. Understanding how Big Beautiful Bill affects small business can help owners and their advisors make informed decisions about tax and legal planning.

20 Percent Pass-Through Deduction Made Permanent

The bill makes the 20% pass-through deduction a permanent part of federal tax law.

• The deduction applies to qualified business income earned by pass-through entities such as sole proprietorships, partnerships, S corporations, and LLCs taxed as pass-throughs.
• Owners of qualifying businesses may continue to deduct up to 20% of their business income on federal tax returns.
• Income limits and restrictions for certain service-based businesses still apply, so not all owners are eligible in every situation.

By removing the prior 2026 expiration date, the law establishes long-term consistency for this deduction.

Bonus Depreciation Restored To 100 Percent

The bill restores 100% bonus depreciation for qualifying asset purchases.

• Businesses are permitted to deduct the full cost of eligible new or used assets, such as machinery, equipment, technology, and software, in the year the asset is placed into service.
• This provision applies to both large and small purchases that meet IRS requirements.
• Recordkeeping is necessary to ensure compliance with eligibility rules and timelines.

This provision is intended to make it easier for businesses to recover the cost of reinvestment in operations.

Expanded Startup Stock Tax Breaks

The law expands the Qualified Small Business Stock (QSBS) exclusion.

• Investors in qualifying startup companies may now exclude up to $15 million in capital gains over time.
• Additional exclusions may apply if stock is held for longer periods, based on IRS rules.
• To qualify, the business must meet IRS definitions of a “qualified small business,” and the stock must meet specific requirements when issued.

This change is designed to encourage more investment in startups and early-stage businesses.

Why Careful Planning Is Important

While these provisions create potential tax benefits, eligibility depends on business structure, income levels, and the type of investments made.

• The 20% deduction may not apply to all service businesses if income exceeds certain thresholds.
• Bonus depreciation applies only to assets that meet IRS definitions.
• QSBS exclusions require businesses and investors to satisfy detailed requirements.

Because the rules are complex, small business owners may want to review their plans with both legal and tax professionals. Understanding how the Big Beautiful Bill affects small business can help you and your advisors decide what opportunities are available and what changes to consider.

Next Steps For Small Business Owners

Business owners considering the impact of the One Big Beautiful Bill may wish to:

• Review how their business structure aligns with the 20% pass-through deduction.
• Evaluate the timing of equipment or technology purchases in light of bonus depreciation rules.
• Assess eligibility for QSBS benefits if they are seeking or issuing investment.
• Coordinate tax strategies with long-term succession or estate planning goals.

Working With Advisors

Changes in federal law can influence financial and legal strategies for small businesses. At Bosshard Parke, we assist business owners in La Crosse, Sparta, and western Wisconsin with entity structuring, compliance, and long-term planning. 

Disclaimer: This blog post is for informational purposes only and does not constitute legal or tax advice. For personalized guidance, please consult an attorney or tax professional at Bosshard Parke.