A quick guide for small business owners

What the new tax law means for you

Congress just passed a major new tax law called the One Big Beautiful Bill Act. While the name may be flashy, the changes inside are real, and many directly affect you as a small business owner. The bill is nearly 900 complicated pages long, so we’ve put together a two-page summary of what you need to know as a business owner, in plain language.

What’s changing with your personal taxes?

Lower tax rates are now permanent, the higher standard deduction and Child Tax Credit remain, and from 2025–2028, you can claim new deductions for tip income, overtime pay, and car loan interest.

Lower tax rates stay in place.

The individual tax brackets from the 2017 tax law (10%, 12%, 22%, 24%, 32%, 35%, and 37%) were set to expire after 2025. This new law makes them permanent.

The standard deduction remains higher.

In 2025, the amount will be $15,750 for single filers and $31,500 for married couples filing jointly, with annual adjustments for inflation.

The Child Tax Credit is locked in.

You’ll get up to $2,200 per child, plus up to $1,400 refundable (adjusted for inflation), even if you don’t owe taxes.

New deductions available (2025–2028 only):

Tip income: Deduct up to $25,000 in cash or card tips (if you’re in a qualifying job).
Overtime pay: Deduct the extra pay earned from overtime, up to $12,500 (or $25,000 for joint filers).
Car loan interest: Deduct interest on new car loans (U.S.-assembled only), up to $10,000.

What business owners should know

Business owners keep the 20% tax break, can immediately write off equipment and R&D costs, and will see a higher $15M estate exemption in 2026.

You can still deduct 20% of qualified business income (QBI).

If you own a pass-through business like an LLC or S-corp, this deduction is now permanent and more generous for some.

Bonus depreciation is back.

You can immediately deduct the full cost of qualifying equipment and machinery, starting Jan. 20, 2025.

Research & development (R&D) costs can be fully expensed.

Instead of spreading these deductions out over several years, you can now write them off right away.

Estate tax exemption jumps in 2026.

It increases to $15 million per person—great news if you’re planning ahead for business succession or family wealth transfers.

What should you do now?

Plan ahead for major purchases.

With bonus depreciation and expanded expensing, 2025 may be a smart time to invest in equipment, vehicles, or technology.

Talk to your Padgett advisor.

Every business is different, and this law is packed with rules — we’ll help you see what applies to you and how to make the most of it.

Review payroll and reporting systems.

Some deductions (like tips and overtime) require employers to track and report this information to the IRS.

TIMELINE AT-A-GLANCE

Now — Fall 2025:

IRS will release new guidance. Systems may need updates to track tips, overtime, and new deductions.

2026:

Most changes take effect on your 2025 tax return.

2028:

Temporary deductions expire.

2030:

SALT cap returns to $10,000.