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How Do the 2025 Tax Law Changes Affect Your Small Business? A Plain-English Guide
- Susan Hagen
- Aug 21
- 5 min read
The 2025 Tax Law: What’s New for Small Businesses?
The tax landscape is always changing, and this year, 2025, brings some of the most sweeping updates for small business owners in a decade. With two major bills now on the books—the 2025 Tax Bill (enacted July 11, 2025) and the “One Big Beautiful Bill” (signed July 4, 2025)—there are new opportunities, expanded deductions, and some stricter reporting rules you need to know about.
This guide is your plain-English overview of the new tax climate so you can keep more money in your business—and keep the IRS happy.
Key Changes at a Glance
Here’s what you really need to know:
Bigger upfront deductions for equipment and assets
Beefed up research & development (R&D) write-offs
The 20% qualified business income (QBI) deduction is here to stay—and is easier to claim
Updated, inflation-adjusted tax brackets and standard deductions
Stricter reporting for digital and crypto transactions
New deadlines and health insurance incentive tweaks
Let’s zoom in on how these changes might impact your day-to-day finances and annual tax planning.
Equipment and Asset Deductions: Section 179 & Bonus Depreciation
Section 179 Deduction Increases
Section 179 has always been a small business favorite for buying everything from computers to office furniture, vehicles, and heavy machinery. The 2025 updates make it even more generous:
New limit: Deduct up to $2.5 million for qualifying property placed in service during 2025 (up from $1.16 million*).
Phaseout threshold: Hits $4 million. If your business invests even more, your deduction starts phasing out but at a much higher level than before.
What this means: You can write off the full purchase price of business gear right away—no more waiting years to recoup your investments.
100% Bonus Depreciation—Now Permanent
Bonus depreciation lets you deduct the entire cost of most new or used property in year one. The 2025 law makes the 100% deduction rate permanent for anything bought and placed in service after January 19, 2025.
Applies to equipment, machinery, some vehicles, software, and leasehold improvements
Unlike Section 179, there’s no cap on total purchases—bonus depreciation is unlimited
Special for manufacturers: If you start construction on new manufacturing property between January 19, 2025, and January 1, 2031, you unlock this 100% bonus depreciation as well.
Tip: Accelerate any needed equipment purchases this year to claim these new, higher deductions. Want help? Our business consulting service can clarify what qualifies and help you strategize.
R&D Expenses: Get Your Money Back Fast
Previously, deducting research and development (R&D) costs meant spreading them over five or more years. For lots of small businesses, that meant a delayed tax benefit.
2025’s change: All domestic R&D expenses can now be fully deducted immediately—no delay. Overseas R&D still needs to be amortized (spread out) over 15 years, but there’s a fresh option to deduct all remaining capitalized R&D in 2025.
Who benefits: Startups, creative agencies, tech developers, inventors, and virtually any business that tests new products, processes, software, or recipes.
Easy action step: Review your 2025 expenses for R&D—even if you’ve never claimed before. Immediate cash savings could be available.
The QBI (Qualified Business Income) Deduction: Bigger and More Accessible
What’s Section 199A?
If you’re a sole proprietor, partner, S-corp shareholder, or LLC owner, you probably know about the QBI deduction—20% off your qualified business income (with some catches).
2025 update: The 20% deduction is now permanent and better than ever, with:
Higher income limits: Up to $150,000 (married/joint) or $75,000 (single) before limits start kicking in.
Guaranteed minimum deduction: At least $400 for anyone with QBI of $1,000+.
More high-income owners now qualify.
What’s the catch? The rules for “specified service businesses” (accountants, doctors, consultants, etc.) still apply, but with higher limits and easier rules.
Updated Tax Brackets and Standard Deductions
This year, both tax brackets and basic deductions got a beneficial facelift:
2025 Federal Tax Brackets
Tax Rate | Single | MFJ (Married Filing Jointly) |
10% | $0 – $10,000 | $0 – $20,000 |
12% | $10,001–$40,000 | $20,001–$80,000 |
22% | $40,001–$85,000 | $80,001–$170,000 |
24% | $85,001–$160,000 | $170,001–$320,000 |
32% | $160,001–$210,000 | $320,001–$420,000 |
35% | $210,001–$510,000 | $420,001–$1,020,000 |
37% | $510,001+ | $1,020,001+ |
(Standard deductions are now $15,750 for singles, $23,625 for head of household, $31,500 for joint filers—reduced taxable income means lower taxes for most people.)
Planning tip: With higher brackets, you may pay less tax even if your income went up. Revisit your payroll system and quarterly estimates to make sure you’re not over- (or under-) withholding.
Want a personalized projection? Try our free tools or connect with a pro for a tailored session.
Reporting and Compliance: Digital Payments & Cryptocurrency
The IRS is watching digital transactions closer than ever. Here’s what’s changing:
More reporting for third-party payment apps like Venmo, PayPal, Stripe, and Square—if you bring in $600+ per year via any of these, expect a 1099-K.
Cryptocurrency: New laws require better documentation and more detailed reporting of crypto transactions.
Tip: Don’t wait until tax time to sort it out. Keep a separate tally of all business income from apps, websites, or tokens as you receive payments.
For more details or support with digital recordkeeping, check out our bookkeeping catch-up services.
Health Insurance Tax Credits (SHOP Credit)
Small employers providing health insurance to full-time employees can still score a valuable tax break. For 2025:
The “Small Employer Health Insurance Credit” got a small refresh, generally continuing (but not for owner premiums—only W-2 employees!).
The size of the credit and eligibility may vary based on your business size and the plans you offer.
If you have fewer than 25 full-time equivalent employees and pay at least 50% of employees’ health premiums, look into this—don’t leave money on the table!
Filing Deadlines to Remember for 2025
Missing a tax deadline in 2025 could mean big penalties—or lost refunds. Here’s what’s new:
Quarterly Estimated Taxes (if applicable):
Q1: April 15, 2025
Q2: June 16, 2025
Q3: September 15, 2025
Q4: January 15, 2026
Annual Returns:
March 17, 2025: S corporations & partnerships
April 15, 2025: Sole proprietors, LLCs, and C corporations
Extensions:
September 15, 2025: S corps & partnerships
October 15, 2025: Sole proprietors & C corps
Find more resources and downloadable tax calendars on our tax planning and filing page.
Action Steps: Make the Most of the 2025 Tax Changes
All these rule changes can seem overwhelming, but here’s a quick punch-list for small business owners:
Evaluate capital purchases — Accelerate buying or leasing equipment to max out Section 179 and bonus depreciation.
Review your R&D — Claim immediate deductions for any qualifying domestic research expenses.
Double-check your QBI eligibility — If you’re a pass-through business, higher deduction limits could mean a bigger tax break.
Update your bookkeeping systems — Especially if you use digital payment platforms or accept crypto.
Stay on top of new deadlines — Plug the key filing and payment dates into your calendar now.
Talk to a pro — A one-on-one session with our team can help you map a strategy based on your unique situation. Book a business consulting session for tailored support.
Where To Get Help
There are a lot of moving parts in the 2025 tax laws, and every business is unique. The professional team at Your Business Accountant stays updated so you don’t have to—whether it’s monthly bookkeeping, tax planning, or QuickBooks training.
Explore our latest resources on the blog, or reach out directly for a free consultation. Let’s make this your smoothest, most profitable year yet!
For informational purposes only. This is not tax advice. Consult your tax professional or connect with our team for personalized guidance.
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