On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (often shortened to OBBBA or BBB) into law—ushering in sweeping, permanent tax changes that will directly affect how small businesses file their 2026 tax returns.

Here’s a straightforward breakdown of what matters most for Main Street businesses:

1. 20% Pass‑Through Deduction Made Permanent—and Expanded

Small businesses structured as pass‑throughs (like S corporations, LLCs, and partnerships) will continue to enjoy the 20% Qualified Business Income (QBI) deduction—and now it’s permanent. What’s new: qualifying thresholds have increased, and for many, that deduction has effectively grown to 23%.

2. Section 179 & Bonus Depreciation Doubled

The Section 179 equipment-expensing cap has doubled—from $1.25 million to $2.5 million, allowing eligible purchases to be fully deducted in the year they’re placed in service. Bonus depreciation is also permanent, meaning first-year write-offs for qualified property and R&D expenses are solidified .

3. Qualified Small Business Stock (QSBS) Rules Loosened

If you’re a startup or investor:

• Gross-asset limit for a qualified C‑corp jumps from $50 million to $75 million
• Exclusion per investor goes up to $15 million (or 10× investment)
• Tiered capital gain exemptions now:
  • 50% tax-free after 3 years,
  • 75% after 4, and
  • 100% after 5 years of holding the stock

4. Standard Deduction, SALT & Other Personal Tax Moves

While small businesses benefit through pass‑throughs, don’t overlook personal tax changes that impact owners:

• SALT deduction temporarily jumps from $10,000 to $40,000 for filers under ~$500K of MAGI—phasing out above ~$600K  
• Standard deduction is nearly doubled under extended TCJA rules ()
• New tax-free allowances for tips, overtime pay, and car interest (up to set caps) begin in 2026 through 2028  

Bottom Line for Tax Year 2026 (Filed in 2027)

Imagine filing with a cleaner, leaner bottom line:

• Permanent 23% QBI deduction on pass‑through business income
• Immediate write‑offs for new business equipment and R&D expenses
• Bigger upfront deductions reduce both taxable income and tax liability
• If you’re investing in or starting a qualified C‑corporation—holding stock for 5 years may earn you 100% capital gains exclusion

These changes offer real tax savings—for eligible businesses and investors alike.

What You Should Do Now

• Talk to your tax advisor about timing capital investments or equipment purchases to maximize immediate expensing.
• Review your entity structure—especially if you’re near the QBI thresholds—to optimize deductions.
• Track your QSBS holdings and plan potential exits, especially if you’re in early-stage C‑corporations.
• Assess SALT limitations for owner‑filers—those state/local deductions matter.

Why It Matters

This legislation provides tax certainty for the foreseeable future, eliminating expiration concerns for key provisions. That reliability allows business owners to have confidence when investing, hiring, or planning expansion.

And while there are major changes in other areas—like tightened Medicaid and SNAP rules, and cuts to green energy credits—the tax benefits for pass‑through businesses and equipment investments are concrete wins for small business owners  .

At First Coast Accounting, we’re here to help you tailor your strategies around these tax changes. Whether you’re planning capital expenditures or just want to maximize your deductions next year, let’s talk—and keep your business thriving in the year ahead.

Feel free to reach out if you’d like a personalized consult tailored to your business goals.