✅ Permanent 20% Deduction for Qualified Business Income (Section 199A in the US Tax Code)
Summary
Who benefits: Sole proprietors, partnerships, LLCs, and S corporations (pass-through entities).
What it does: Makes permanent the 20% deduction on qualified business income (QBI), originally scheduled to expire in 2025.
Implication: Significantly lowers effective tax rates for small and mid-sized business owners, preserving a substantial tax benefit for owners of pass-through businesses.
Explain like I’m 5: qualified business owners can deduct 20% of their total income and do not have to pay federal tax on it.
Where you can find it
One Big Beautiful Bill: SEC. 70105. EXTENSION AND ENHANCEMENT OF DEDUCTION FOR QUALIFIED BUSINESS INCOME. (Extends Section 199A of the US Tax Code)
Section 199A:
Established in 2017 under the Tax Cuts and Jobs Act
✅ Permanent Corporate Tax Rate (21%)
Summary
Who benefits: C corporations.
What it does: Codifies the 21% flat corporate tax rate introduced by the 2017 Tax Cuts and Jobs Act.
Implication: Provides certainty and a competitive tax environment, particularly beneficial for larger businesses or those considering incorporation.
Explain like I’m 5: The One Big Beautiful Bill never said anything about changing the already established corporate tax rate.
Where you can find it
Tax Cuts and Jobs Act: SEC. 13001. 21-PERCENT CORPORATE TAX RATE
✅ Full Expensing for Equipment and Qualified Property
Summary
Who benefits: Businesses making capital investments (especially in manufacturing, technology, farming, and construction).
What it does: Makes permanent the 100% bonus depreciation for qualified property and equipment (e.g., machinery, computers, vehicles).
Implication: Encourages investment by allowing businesses to immediately write off the full cost of new (and used) qualifying assets instead of depreciating them over time.
Explain like I’m 5: I run a factory. I buy a qualified piece of machinery where I can write off 100% of the depreciation for it immediately, as opposed to writing of its depreciation over 10 years.
Where you can find it
One Big Beautiful Bill: SEC. 70307. SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED PRODUCTION PROPERTY.
✅ Small Business Expensing (Section 179)
Summary
Who benefits: Small businesses purchasing equipment or software.
What it does: Increases the expensing limit and phase-out thresholds under Section 179 and makes them permanent.
Implication: Simplifies tax planning for small businesses and allows faster write-offs of capital expenses.
Explain like I’m 5: Before the One Big Beautiful Bill, my small business could expense up to $1M in purchases for certain assets and deduct them from my taxes. Now I can expense up to $2.5M in certain assets to deduct from my taxes!
Where you can find it
One Big Beautiful Bill: SEC. 70306. INCREASED DOLLAR LIMITATIONS FOR EXPENSING OF CERTAIN DEPRECIABLE BUSINESS ASSETS (Amends Section 179 of the US Tax Code).
Section 179: Election to expense certain depreciable business assets
✅ Research and Development (R&D) Expensing Improvements
Summary
Who benefits: Innovative businesses and tech firms.
What it does: Provides more favorable and permanent treatment of R&D expenditures, reversing a requirement to amortize such expenses over multiple years.
Implication: Makes R&D more attractive, especially for startups and firms relying on innovation.
Explain like I’m 5: Businesses in the US can be expense R&D immediately as opposed to over several years like before.
Where you can find it
One Big Beautiful Bill: SEC. 70302. FULL EXPENSING OF DOMESTIC RESEARCH AND EXPERI MENTAL EXPENDITURES.
✅ Territorial Tax System (for Multinationals)
Summary
Who benefits: U.S.-based multinationals.
What it does: Continues the shift toward a territorial system, with reforms such as 100% deduction for dividends received from foreign subsidiaries.
Implication: Reduces disincentives for repatriating foreign income and supports global competitiveness of U.S. businesses
Explain like I’m 5: A US company looks to build a manufacturing plant in Scotland. Using a new set of accounting practices (calculating FDII and GILTI) the US company pays US tax upfront instead of using foreign loopholes to defer paying tax.
Where you can find it
Tax Cuts and Jobs Act: Subpart B—Rules Related to Passive and Mobile Income: CHAPTER 1—TAXATION OF FOREIGN-DERIVED INTANGIBLE INCOME AND GLOBAL INTANGIBLE LOW-TAXED INCOME
✅ Enhanced Deductions for Rural and Small Business Investment
Summary
Who benefits: Small businesses in rural or underserved areas.
What it does: Provides targeted provisions encouraging investment in rural infrastructure and local enterprise zones.
Implication: Helps level the playing field for rural entrepreneurs and regional business growth.
Explain like I’m 5: If I run a small business, or a rural business, Uncle Sam is going to start taking it easier on me. He is going to give me flexibility on capital gains, income tax exemptions on loans secured for agriculture, loans for rural real estate and more!
Where you can find it
One Big Beautiful Bill: Subchapter D—Permanent Investments in Small Business and Rural America
Did You Know? The shortest presidency was only 31 days! William Henry Harrison, the 9th President of the United States, served just one month in 1841 before dying of pneumonia—believed to have been caused by giving a nearly two-hour-long inaugural speech in freezing weather… without a coat or hat.
Till next time,
Tax Hacks
The content provided in this newsletter is for informational purposes only and is not intended to be, and should not be construed as, professional tax, legal, or financial advice. While we strive to ensure accuracy, tax laws are complex and subject to change. Always consult with a qualified tax professional or financial advisor regarding your specific situation before making any decisions based on the information provided herein.