The One Big Beautiful Bill Act (OBBBA) introduced several tax changes that create valuable planning opportunities for small business owners. While many of these provisions can significantly reduce taxes, the biggest mistake business owners can make is assuming every deduction or election automatically benefits them.
The reality is that effective tax planning isn’t about claiming every deduction—it’s about choosing the strategies that best fit your business today and your long-term goals.
Here are seven important areas every business owner should discuss with their CPA before year-end.
1. Take Advantage of Expanded Business Deductions
One of the biggest changes under OBBBA is the restoration of 100% bonus depreciation for qualifying property placed in service after January 19, 2025. Businesses purchasing equipment, machinery, computers, software, office furniture, vehicles, and certain building improvements may now be able to deduct the full cost immediately instead of spreading deductions over several years.
Additionally, Section 179 expensing has been expanded, allowing businesses to expense up to $2.5 million of qualifying assets.
However, bigger deductions aren’t always better.
If your business expects significantly higher income in future years, it may actually be more beneficial to spread deductions over time rather than taking everything at once. This is why tax projections are critical before making depreciation elections.
Planning Tip: Before purchasing major assets, speak with your CPA to determine the most tax-efficient depreciation strategy.
2. Qualified Small Business Stock (QSBS) Could Save Millions
Many business owners have never heard of Qualified Small Business Stock (QSBS), but for the right company, it can be one of the most valuable tax benefits available.
OBBBA expanded QSBS by introducing partial capital gain exclusions based on how long the stock has been held:
- 3 years: 50% exclusion
- 4 years: 75% exclusion
- 5 years: 100% exclusion (up to $15 million per taxpayer)
For entrepreneurs planning to sell their business, this can dramatically reduce capital gains taxes.
The catch?
QSBS generally requires the business to be structured as a C Corporation, and the planning must occur well before a sale is on the horizon.
Planning Tip: If selling your business could be part of your long-term strategy, discuss your entity structure now—not after receiving an acquisition offer.
3. Don’t Overlook the Qualified Business Income (QBI) Deduction
The 20% Qualified Business Income (QBI) deduction remains available under OBBBA and continues to be one of the most valuable deductions for many pass-through businesses.
However, eligibility depends on several factors, including:
- Taxable income
- Business structure
- Wages paid
- Depreciation
- Retirement plan contributions
This is where tax planning becomes interconnected.
Reducing taxable income through retirement contributions or depreciation may help preserve your QBI deduction, while changing your business entity to qualify for QSBS could eliminate QBI eligibility altogether.
There is no universal answer—the right strategy depends on your specific circumstances.
4. Consider PTET Elections to Work Around SALT Limits
The State and Local Tax (SALT) deduction has been expanded under OBBBA, increasing from $10,000 to as much as $40,000 for qualifying taxpayers.
Many states also offer a Pass-Through Entity Tax (PTET) election that allows LLCs, partnerships, and S corporations to deduct state taxes at the entity level, potentially bypassing federal SALT limitations.
Because PTET rules vary by state and election deadlines differ, this is an area that should be reviewed annually.
Planning Tip: If your business is an LLC, S Corporation, or partnership, ask your CPA whether a PTET election could reduce your federal tax bill.
5. Make Sure Your Retirement Plan Still Fits Your Business
Many business owners establish a retirement plan when the company is small—and never revisit it.
As businesses grow, their retirement plans should evolve as well.
A SIMPLE IRA or SEP IRA that worked when you had one employee may no longer be the best solution after hiring additional staff or significantly increasing profits.
SECURE Act 2.0 also continues to offer valuable incentives, including startup tax credits for businesses implementing new retirement plans.
The right retirement plan can:
- Increase retirement savings
- Reduce taxable income
- Improve employee benefits
- Potentially generate valuable tax credits
Reviewing your retirement plan every few years ensures you’re taking full advantage of today’s opportunities.
6. High-Income Business Owners Should Explore Cash Balance Plans
For business owners in their peak earning years, traditional retirement plans may not provide enough contribution room.
Cash balance plans and defined benefit plans can allow eligible business owners to contribute hundreds of thousands of dollars annually on a tax-deferred basis.
These plans are particularly attractive for:
- Medical professionals
- Attorneys
- Consultants
- Established business owners
- Professionals with consistent high income
While these plans require careful design and ongoing administration, the tax savings can be substantial.
Planning Tip: If you’re consistently generating significant income, ask your CPA and retirement plan administrator whether a cash balance plan makes sense.
7. Revisit Your Business Structure Regularly
One of the biggest tax mistakes business owners make is assuming the entity they formed years ago is still the best option today.
Your ideal business structure changes as your business evolves.
For example:
- An LLC may maximize QBI deductions.
- A C Corporation may unlock QSBS benefits.
- An S Corporation may reduce self-employment taxes.
- Different structures may impact retirement planning, depreciation, and exit strategies.
Your entity should support where your business is headed—not simply where it started.
The Bottom Line
The One Big Beautiful Bill Act created meaningful tax-saving opportunities for small business owners—but only if those opportunities are properly coordinated.
Many of these provisions interact with one another, making comprehensive planning more valuable than ever.
Rather than focusing on individual deductions, successful tax planning looks at the bigger picture:
- Your current income
- Future business growth
- Planned equipment purchases
- Retirement goals
- Business succession or sale
- Long-term tax strategy
A proactive conversation with your CPA before year-end can help ensure you’re taking advantage of the opportunities available while avoiding costly mistakes.
