The One Big Beautiful Bill (OBBB) delivers a wide range of permanent and temporary tax changes that will affect family-owned businesses, their owners, and their employees. Key provisions span individual tax rules, employee benefits, business deductions, investment incentives, and estate planning opportunities. From restoring full bonus depreciation and expanding Section 179 expensing to making the gift, estate, and GST exemption permanent and enhancing Qualified Opportunity Zone benefits, the bill offers multiple ways to reduce tax liability, reinvest in operations, and strengthen long-term succession plans. This overview highlights the provisions most relevant to family enterprises and outlines steps to plan ahead.
Contents
- Highlights for Individual Taxpayers
- Highlights for Employees
- Highlights of Business Tax Provisions
- Other Matters
- Planning Ahead
Family-owned businesses operate at the intersection of legacy and daily operations. Every decision impacts not only your bottom line but also the well-being of your family and future generations. The One Big Beautiful Bill (OBBB) touches on core aspects of taxation—from how you finance day-to-day operations to how you pass wealth on to heirs. By understanding its provisions you can chart a strategic course that supports growth today and secures your family’s future.
Highlights for Individual Taxpayers
The bill extends and modifies several provisions originally enacted under the Tax Cuts and Jobs Act, while introducing new deductions and credits.
- Basic rates unchanged
The seven tax brackets remain 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
- Qualified Business Income (QBI) deduction
Now permanent at 20%, with expanded phase-out ranges and a minimum $400 deduction for “qualified active business income” (begins 2026).
- Gift, Estate, & GST Tax Exemption
Now permanent, unified gift, estate, and generation-skipping transfer (GST) tax exemption will rise to $15M per individual ($30M married) from January 1, 2026, and will be indexed for inflation. This change can help in planning for the transfer of wealth to future generations.
- Qualified Opportunity Zones (QOZs)
QOZ provisions are now permanent, with incentives such as a 5-year gain deferral and a 10% basis step-up after 5 years. Gains on Qualified Opportunity Fund (QOF) investments held 10 years or more are tax-free.
- Qualified Small Business Stock (QSBS)
For stock acquired on or after July 4, 2025:
- 50% gain exclusion if held more than 3 years
- 75% exclusion if held more than 4 years
- 100% exclusion if held more than 5 years
Exclusion limit rises from $10M to $15M, indexed after 2026.
Highlights for Employees
- Overtime pay deduction
Employees can deduct overtime pay on personal returns (employer payroll taxes unchanged).
- Tip income deduction
Employees can deduct tips; employers will have new reporting requirements (IRS guidance pending).
- Family & Medical Leave Credit
Made permanent.
- Employer-provided child care credit
From 2026, credit rate rises to 40% (50% for small businesses); cap increases to $500,000 ($600,000 for small businesses).
- Educational assistance plans
Student loan repayment up to $5,250 per year is now permanent, indexed after 2025.
- Dependent care assistance plans
Limit increases to $7,500 in 2026 (half for married filing separately).
Highlights of Business Tax Provisions
- Section 174 R&D Expensing (Domestic)
Domestic research and experimental expenditures may now be immediately deducted, under a new Section 174A, for costs incurred after December 31, 2024. Foreign R&D costs must still be amortized over 15 years. This change is retroactive for small businesses (under $31 million average receipts) to tax years beginning after December 31, 2021. - Bonus Depreciation
Restored to 100% for property placed in service on or after January 19, 2025; permanently extended and broadly applicable. - Section 179 Expensing
The maximum Sec. 179 expensing amount increases to $2.5 million, with a $4 million phase‑out threshold; both indexed for inflation. - Expensing of qualified production property
The cost of constructing a manufacturing, production, or refining facility can be immediately deducted. This applies to construction that begins after January 19, 2024, and before January 1, 2029.
- Business Interest Limitation (Section 163(j))
Reverts to an EBITDA-based calculation beginning in 2025, with no sunset provision. - Form 1099 Reporting
The information reporting threshold rises from $600 to $2,000 with respect to payments made after December 31, 2025. The $2,000 threshold is indexed for inflation beginning in 2027. - Employee Retention Credit (ERC)
Claims for Q3 and Q4 of 2021 are disallowed if they are filed after January 31, 2024; enforcement and penalty provisions are strengthened.
Other Matters
- State and Local Taxes (SALT) cap
The dollar limit on itemizing state and local taxes has been increased from $10,000 to $40,000 beginning in 2025. The deduction phases out for high-income taxpayers. The final version of the bill did not alter the ability of owners of pass-through entities to use a pass-through entity tax (PTET) if one is available in their locality.
- Loss limit for pass-through owners
The limit is now permanent. Excess losses now carry over to be used in the following year after they are retested (i.e., subject to the applicable limit in that year); they do not become net operating losses as they had in the past.
- Clean Energy Credit Phaseouts
Multiple clean energy incentives are terminated or scaled back: - Alt. Fuel Refueling Property (Sec. 30C): Ends for property acquired after June 30, 2026
- Residential Clean Energy (Sec. 25D): Ends after December 31, 2025
- Clean Electricity Credits (Secs. 45Y & 48E): Wind/solar facilities placed in service after 2027 lose credits; other facilities after 2032
- New Energy Efficient Home Credit (Sec. 45L): Ends for homes acquired after June 30, 2026
- Energy Efficient Commercial Buildings Deduction (Sec. 179D): Ends for property that begins constructions after June 30, 2026
Planning Ahead
Strategic Investments: Consider making strategic investments in areas like Qualified Opportunity Zones and taking advantage of the increased Section 179 expensing limits to maximize tax benefits.
Estate Planning: Utilize the higher gift, estate, and GST tax exemptions to plan for the transfer of wealth to future generations, ensuring long-term financial stability for your family.
Work with Tax Professionals: Given the complexity and breadth of the changes, it’s advisable to work proactively with experienced tax professionals to navigate these changes effectively and ensure your business captures every available benefit while remaining compliant with new requirements.
John Hadwen is a Principal at ARB. He specializes in providing individuals and businesses with comprehensive
tax compliance and consulting services related to closely-held business, manufacturing, construction & real estate, and professional services firm taxation. Prior to joining ARB, John was a Tax Principal at a large, regional CPA firm.
