OBBBA Small Business Changes

Business Provision	Before the OBBBA	New Law
Clean vehicle credits	Provides tax credits for the purchase of new and pre-owned electric and other clean vehicles.	After September 30, 2025, buyers and lessees will no longer be eligible for the $7,500 tax credit on new electric vehicles (EVs), the $4,000 credit on used EVs, or the up to $40,000 credit on heavier trucks.
Alternative fuel vehicle refueling property credits	Provides a tax credit of up to $30,000 for eligible alternative fuel vehicle refueling property placed in service before 2033.	Credit terminated for property placed in service after June 30, 2026.
Employer- provided child care credit	Provides a tax credit equal to 25% of expenses—capped at $150,000 annually.	Effective 2026, the credit increases to 40% for regular businesses and 50% for eligible small businesses. The annual credit cap rises to $500,000 and $600,000, respectively.
Employer credit for paid family and medical leave	Provides a 12.5%–25% business tax credit on eligible wages paid to qualifying employees during family and medical leave. Expires after 2025.	Effective 2026, makes the credit permanent and allows the credit either (a) based on wages or (b) for a portion of paid family leave insurance premiums.
Advanced manufacturing production credit	Offers tax credits for producing solar, wind, inverter, battery, and critical mineral components. Credits phase out from 2023, except for minerals.	Effective July 5, 2025, disallows the credit for specified foreign or foreign- influenced entities. Phases out credits for critical minerals: 75% in 2031, 50% in 2032, 25% in 2033, and none from 2034 onward. Ends wind component credit after 2027.
Business interest	Net interest expenses are limited to 30% of adjusted taxable income.	Effective 2025, the adjusted taxable income cap on deductible business interest expense increases by eliminating depreciation, amortization, and depletion from the calculation.
Bonus depreciation	Allows 40% bonus depreciation in 2025, 20% in 2026, and zero in 2027 and beyond.	Effective January 20, 2025, permanently sets bonus depreciation at 100%.
Corporate charitable contributions	Permits C corporation charitable deductions, generally limited to 10% of taxable income.	Effective 2026, adds a 1% floor. C corporation contributions above 1% of taxable income are deductible, up to a 10% limit.
Research and development expensing	Must capitalize and amortize most specified R&D expenditures over five years.	Effective 2025, allows immediate deduction of domestic R&D costs in the year incurred or, if elected, amortization over not less than 60 months. Allows small businesses to elect retroactive expensing for 2022, 2023, and 2024.
Election to expense certain business assets	Up to $1 million of the cost of qualifying property placed into service may be expensed, reduced by the phase-down beginning at $2.5 million.	Effective 2025, the expensing limit increases to $2.5 million and the phase-down threshold increases to $4 million.
Energy-efficient commercial buildings	Owners and designers can deduct qualified energy-efficient commercial building expenses, including those related to interior lighting, HVAC systems, and the building envelope.	Terminates the energy-efficient commercial building deduction for property construction that begins after June 30, 2026.
Qualified business income deduction	Individuals can deduct up to 20% of qualified income from pass-through businesses, REITs, cooperatives, and publicly traded partnerships. Expires December 31, 2025.	Effective 2026, permanently extends up to 20% deduction, creates a minimum deduction, and increases phaseouts: $50,000 to $75,000 for singles and $100,000 to $150,000 for joint filers.
Employer- provided meals	After 2025, employers will no longer be able to deduct costs for on-site meals or company-operated dining facilities.	Effective 2026, carves out an exception and creates 100% employee meal deductions for restaurants, catering operations, and Alaska’s fishing industry.
Excess business losses	When a business loss exceeds $313,000 (single) or $626,000 (joint return), the excess becomes a net operating loss carryover. Expires 2028.	Effective in 2027, makes the excess business loss rules permanent.
Qualified Small Business Stock (QSBS)	Section 1202 allowed a 100% capital gains exclusion for QSBS held five years, capped at $10 million or 10× basis, with strict eligibility.	For QSBS issued after July 4, 2025, Section 1202 offers tiered exclusions (50–100%) for earlier QSBS exits, raises the gain cap to $15 million and asset limit from $50 million to $75,000 million, and allows partial benefits before five years.
Qualified opportunity zones	No new investments after December 31, 2026.	Effective in 2027, establishes a permanent opportunity zone program with five- year gain deferral, 10% basis boost, zones redesigned every 10 years, special rural incentives, stricter eligibility, and stronger reporting.
1099s MISC/NEC	A business must issue Form 1099 for any payment of $600 or more made in the course of a trade or business.	Effective in 2026, increases the payment threshold to $2,000 per payee.
1099-K	Third-party platforms must issue Form 1099-K for payments exceeding $2,500 for goods or services.	Effective in 2025 and retroactive to 2022, the thresholds for Form 1099-K third- party network reporting are reinstated at $20,000 and 200 transactions.

If you have any questions, please contact our office.

More Insights

OBBBA Individual Changes

September 4, 2025

This chart compares current tax law with changes under the proposed OBBBA, highlighting how it affects individual tax rates, credits, deductions, and savings plans. It outlines provisions that become permanent, new benefits for families and seniors, expanded savings opportunities, and the elimination or reduction of certain deductions and credits. Overall, it shows how the OBBBA reshapes the tax code starting in 2025 and beyond.

Making Estimated Tax Payments

February 26, 2025

Don’t let the penalty for underpayment of estimated tax apply to you. The penalty is more expensive than it first appears because the penalty payment is not tax-deductible.
The only sure way to avoid the underpayment penalty is to make sufficient, on-time estimated tax payments. Choosing a payment method such as IRS Direct Pay or EFTPS and setting up your installments to pay on time helps avoid the penalty.
If you miss a payment or don’t pay enough on time, you can make a catch-up payment that stops the interest charge penalty from running. But you can’t make the penalty go away.
Make sure you understand the exceptions that allow you to avoid the underpayment penalty. Given that the time value of money is once again a consideration these days, the exceptions can come in handy.

FinCEN New Filling Requirements

January 11, 2024

After years of delays, the first stage of the Corporate Transparency Act (CTA) goes into effect on January 1, 2024. It imposes a new federal filing requirement for most corporations and limited liability companies (LLCs).The CTA’s purpose is to prevent the use of anonymous shell companies for money laundering, tax evasion, and other illegal purposes. But it applies to honest business owners as well as criminals.

IRS Lowers E-filing Threshold to 10 Effective January 1, 2024

December 5, 2023

The Taxpayer First Act of 2019, enacted July 1, 2019, authorized the Department of the Treasury and the IRS to issue regulations that reduce the 250-return requirement for 2023 tax returns. However, the e-file threshold for returns required to be filed in 2023 remains at 250. The e-file threshold of 10 is effective for returns required to be filed on or after January 1, 2024.

Pass-through entity tax (PTET), what is it, how does it work, and does it affect you?

November 8, 2023

Pass-through entities (PTE) that qualify are generally S corporations, partnerships and multi-member LLCs which are taxed as S corporations or partnerships. C corporations, single member LLCs, sole proprietorships, and trusts (in most states) are not eligible.

Avoiding Interest and Penalties on Improper ERC Claims

October 20, 2023

The IRS is offering a way for small businesses to potentially avoid any and all interest and penalties by withdrawing their claim. Specifically, small businesses that sent in an ERC claim that is still being processed can withdraw their claim and avoid the possibility of getting a refund for which they are ineligible. If you used an outside firm to obtain your Employee Retention Credit and have concerns about whether they adequately vetted your claim, now is a good time to contact our office to take a second look.