The newly enacted One Big Beautiful Tax Law brings sweeping updates designed to simplify the tax code and stimulate small business growth. While it creates fresh opportunities for taxpayers, it also introduces new complexities — and those who plan early stand to benefit most.
Here are four key strategies every business owner and professional should review now to lower their tax bill under this new legislation.
1. Maximize the 20% Pass-Through Business Deduction (QBI)
One of the most powerful provisions of the One Big Beautiful Tax Law is the continuation and expansion of the Qualified Business Income (QBI) deduction.
Owners of S corporations, LLCs, partnerships, and sole proprietorships may deduct up to 20% of qualified business income, significantly lowering their effective tax rate.
Planning tip:
- Keep taxable income under the phase-out thresholds.
- Consider entity restructuring or adjusting compensation to preserve eligibility.
- Use deductions and retirement plan contributions strategically to stay within the income limits.
This deduction remains one of the most valuable tools available to small business owners, professionals, and independent contractors.
2. Accelerate Deductions with 100% Bonus Depreciation
The law extends 100% bonus depreciation for qualified assets placed in service — including certain used property, vehicles, furniture, and technology. This means you can deduct the entire cost of an asset in the year of purchase, instead of depreciating it over time.
Example: If you purchase $150,000 in new equipment this year, you may be able to deduct the full amount immediately, reducing taxable income and improving cash flow.
Pro tip: Time major purchases strategically before year-end and confirm the assets are placed in service to secure the deduction.
3. Expand Employee Benefit Programs to Unlock New Credits
The One Big Beautiful Tax Law enhances several small business tax credits tied to employee benefits — including credits for providing paid family leave, health coverage, and retirement plans.
In some cases, businesses can claim a tax credit for up to 50% of eligible costs associated with starting or improving these benefit programs.
Why it matters:
- Strengthens retention and recruiting efforts.
- Reduces employer payroll taxes.
- Builds a healthier, more productive workforce — all while cutting your tax bill.
4. Make Retirement Planning Central to Your Tax Strategy
Retirement plan contributions remain one of the most flexible and effective tax strategies under the new law. Increased contribution limits for 401(k)s, SEP IRAs, and defined benefit plans allow business owners to shift income from high-tax years into future retirement savings.
Tax-smart move:
- Max out employer and employee contributions.
- Consider a cash balance plan if you’re looking to make six-figure deductions.
- Align contributions with your business cash flow for maximum impact.
Final Thoughts
The One Big Beautiful Tax Law offers real, tangible opportunities for small business owners to reduce taxes, reinvest profits, and build long-term wealth. But the biggest savings come from strategic, proactive planning — not last-minute tax prep.
Before year-end, review your income, entity structure, and deductions with your CPA to ensure you’re positioned to take advantage of these four key strategies. Call 509-893-0150 if you’d like to discuss your situation in more depth.