Small Business Owners: Leveraging the One Big Beautiful Bill for Strategic Growth

The One Big Beautiful Bill Act introduces significant tax reforms designed to promote small business investment and expansion. Key provisions include immediate expensing for manufacturing facilities, permanent 100% bonus depreciation, and increased Section 179 limits. These changes offer substantial opportunities for businesses across manufacturing, construction, technology, and service sectors, provided they are strategically utilized.

Manufacturing Incentives 

• Immediate Expensing of Production Facilities: Section 168N allows full first-year expensing of qualified production property, including buildings, for projects initiated between January 20, 2025, and December 31, 2028, and placed in service by January 1, 2031. Only areas integral to manufacturing qualify; administrative and lodging spaces are excluded.  

• Cost Segregation: For mixed-use facilities, a cost segregation study can maximize deductions by distinguishing production areas from non-qualifying spaces.  

Capital Investment Provisions 

• Bonus Depreciation: Permanently set at 100% for property placed in service after January 19, 2025. This provision is not subject to income limitations, benefiting businesses reinvesting in growth.  

• Section 179 Expensing: The limit has doubled to $2.5 million, with phase-out beginning after $4 million. 

Additional Tax Benefits 

• Immediate R&D Expensing: Businesses can now expense R&D costs immediately and some small taxpayers can retroactively reclaim expenses from 2022–2024, potentially generating refunds.  

• Interest Deduction: EBITDA is reinstated for interest deduction calculations, improving tax efficiency for leveraged growth.  

• Construction Contract Flexibility: The completed contract method now applies to all residential construction, not just single-family homes, simplifying accounting and enhancing cash flow management.  

Credits and Incentives 

• Paid Family and Medical Leave Credit: Permanently expanded to include insurance premiums, making it easier for employers to offer paid leave.  

• Employer-Provided Childcare Credit: Increased to 40% (50% for small businesses) with a maximum of $500,000 per year.  

• Qualified Small Business Stock (QSBS): Graduated gain exclusions and higher limits make QSBS planning more attractive for businesses planning an eventual sale.  

Administrative Relief 

• Higher 1099 Thresholds: The reporting threshold for 1099-MISC and 1099-NEC increases to $2,000, and for 1099-K to 200 transactions over $20,000, reducing compliance burdens beginning with 2026 filings. 

Community and Agricultural Incentives 

• Opportunity Zones: Enhanced and permanent benefits support long-term planning for businesses in designated zones, especially in rural and distressed areas.  

• Agricultural Provisions: Lender incentives and farmland sale deferrals address the unique needs of rural businesses.  

Conclusion 

The One Big Beautiful Bill fundamentally changes the tax landscape for small businesses, rewarding reinvestment and growth. Strategic planning and proactive engagement with tax advisors are essential to fully leverage these opportunities.