When Washington passes sweeping tax legislation, business owners often find themselves reading the fine print late at night wondering what it all means for them. 

The One Big Beautiful Bill (OBBB), set to take effect in 2025, is no exception. 

But here’s the good news: this bill actually delivers. For many entrepreneurs and closely held business owners, it offers some real wins along with a few important caveats. 

At SteelPeak, we’ve unpacked the key changes so you don’t have to. Here’s what small business owners should know now to plan smarter for what’s ahead. 

Top 5 Benefits for Business Owners

1. The 20% Qualified Business Income Deduction Is Now Permanent 

What it is: 
If you’re a sole proprietor, S-corp owner, or LLC member, you may already be familiar with the QBI deduction. It allows you to deduct 20% of your qualified business income effectively lowering your tax rate on pass-through earnings. 

What’s changing: 
This popular deduction was set to sunset in 2025. The new bill makes it permanent. 

Why it matters: 
This creates long-term planning stability. You can structure compensation, business income, and even your entity type with more confidence without racing against a political clock. 

What to do now: 
It’s worth revisiting your ownership structure, especially if you’ve considered converting from a C-corp or have multiple pass-throughs in the family. A more permanent QBI deduction opens up new opportunities.

2. 100% Capital Expensing Is Back 

What it is: 
Capital expensing lets you deduct the full cost of eligible business assets (equipment, software, vehicles, etc.) in the year they’re placed in service instead of depreciating them over time. 

What’s changing: 
The bill restores full expensing at 100% for qualifying assets. 

Why it matters: 
This can significantly reduce taxable income for business owners reinvesting in their companies. It also improves cash flow by allowing immediate write-offs. 

What to do now: 
If you’ve been delaying purchases or capital upgrades, 2025 may be the year to lean in. From commercial kitchen equipment to cloud servers, timing these expenses could make a big difference. 

3. Overtime Pay and Tips Are Tax-Free Up to a Limit

What it is: 
Employees will no longer pay federal income tax on: 

• Overtime earnings up to $12,500 (single) or $25,000 (married) 
• Tips up to $25,000 

Why it matters: 
While this benefit is aimed at workers, it could indirectly benefit business owners, especially those in hospitality, retail, or services. Your team may take home more without increasing your labor costs. 

What to do now: 
Consider how this might support recruitment, retention, or morale. For small businesses that rely on seasonal or hourly help, this is a chance to promote a “bigger paycheck” without raising wages. 

4. Dependent Care and Child Tax Credit Enhancements

What it is: 

• Child Tax Credit increases to $2,200 
• Dependent Care Credit limit jumps to $7,500 

Why it matters: 
Many small business owners file jointly with a spouse and still have young children or dependent care expenses. These increased credits could reduce your tax liability. 

What to do now: 
Be sure to structure compensation and deductions with your household’s full financial picture in mind. For example, if your spouse is on payroll or helps with the business, this may factor into childcare credit eligibility. 

5. Higher Estate and Gift Exemption... Coming in 2026 

What it is: 
Beginning in 2026, the federal estate and gift tax exemption increases to: 

• $15 million for individuals 
• $30 million for married couples 

Why it matters: 
Many small business owners have a large portion of their net worth tied up in the company. This expanded exemption offers more breathing room for succession planning. 

What to do now: 
Use 2025 to prep. Whether you’re planning to transfer shares to the next generation or set up trusts, this could reduce estate taxes down the road, without needing to rush gifts under the current exemption. 

3 Key Watchouts 

1. Many Provisions Are Temporary 

A recurring theme in the OBBB is expiration dates. Several provisions are set to end in 2028, including: 

• Tax-free treatment of tips and overtime 
• The senior “bonus” deduction (which could affect your retirement income) 
• Some enhanced credits 

Why it matters: 
Your 2025 strategy may look very different from your 2029 plan. Flexibility is key. 

What to do now: 
Work with your advisor to identify which opportunities are short-term vs. long-term, and time your actions accordingly. A smart 3- to 5-year plan could make all the difference. 

2. Phaseouts Based on Income 

Some of the bill’s most generous perks phase out at higher income levels. This includes the senior deduction, certain credits, and potentially the way business owners take advantage of expensing. 

Why it matters: 
If your adjusted gross income is near the threshold, one large contract or equipment purchase could tip you out of eligibility. 

What to do now: 
Be strategic about timing income and expenses. If your business has lumpy earnings, consider shifting income between years or using retirement contributions to stay under phaseout limits. 

3. Audit Risk May Increase 

With more generous tax provisions come more eyes on compliance. The IRS has been steadily increasing audits on small businesses, particularly those taking QBI deductions or running multiple pass-throughs. 

Why it matters: 
Audit risk isn’t about fear it’s about being prepared. 

What to do now: 
Make sure your documentation is airtight. Especially if you’re claiming new deductions or changing your entity structure. A proactive CPA or wealth advisor can help you stay on solid ground.

What Else Should Business Owners Think About? 

Beyond the tax provisions, here are a few areas worth exploring in light of the OBBB: 

• Succession Planning: With the estate exemption set to increase in 2026, 2025 is a golden opportunity to revisit buy-sell agreements, family transition strategies, or business sale plans. 
• Entity Restructuring: If you’ve been debating between S-corp, C-corp, or partnership status, the permanence of the QBI deduction may tilt the math in favor of one option. 
• Tax Diversification: Consider how to balance income between business distributions, salary, dividends, and retirement contributions to create the most tax-efficient mix.

Final Word 

The One Big Beautiful Bill lives up to its name for now. But as with any legislation, the real advantage comes not just from knowing what’s changed, but from making the changes work for you. 

At SteelPeak, we work hand-in-hand with business owners to build integrated financial strategies that account for taxes, liquidity, retirement, and legacy, all under one roof. 

If you're running a business and want to take full advantage of the new rules, let’s talk. 

Because when your business is your biggest asset, your plan should treat it that way.