Examining the benefits of the One Big Beautiful Bill for business owners
By Adam Ludman, Andrew Oshman, Ajit George and Cheyenne Del Savio
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, permanently extended many of the temporary provisions of the 2017 Tax Cuts and Jobs Act (TCJA), restored business tax incentives and introduced new provisions designed to stimulate the economy. These changes provide opportunities for business owners to decrease their tax burden, and in so doing, improve cash flow.
A business owner’s ability to take advantage of the new tax laws will depend on the type of business they own, if and when they intend to sell their business, and their desire to gift equity in the company to other family members, among other considerations.
Given the unique circumstances of every business owner, it’s important to understand the relevant sections of the new legislation, work closely with your tax advisors and conduct substantial due diligence before embarking on any tax-related strategy.
Below are four aspects of the OBBBA most likely to have a big impact on business owners.
Increases in the gift and estate tax exclusion amounts
The OBBBA permanently increases the amount of wealth that business owners can transfer to the next generation without incurring gift or estate taxes. In 2025, individuals can transfer up to $13.99 million ($27.98 million for married couples) without incurring gift or estate taxes. Effective January 1, 2026, the exclusion amount increases to $15 million ($30 million for married couples), adjusted annually for inflation beginning in 2027.
Transferring business interests to future generations, whether outright or in trust, can preserve family wealth. That’s because future appreciation in gifted assets would not be subject to U.S. estate tax upon your (or your spouse’s) death. Gifting a minority interest or non-voting shares in illiquid assets can be especially attractive if those interests are eligible for valuation discounts.
Key takeaway: Any wealth transfer should be part of a comprehensive plan that considers your goals, spending and income (whether you choose to retain or sell your business).
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More benefits from qualified small business stock (QSBS)
For certain business owners, the OBBBA enhancements to the QSBS provisions can potentially save millions in taxes. But it’s complicated, and those who aren’t careful may find they have inadvertently eliminated their eligibility over time.
In general, the QSBS rules encourage investment in small businesses by allowing some or all of the gains from the sale of qualifying shares to be realized tax‑free. QSBS can be especially attractive for early-stage founders, employees and investors.
Before the passage of the OBBBA, someone owning QSBS for five years could exclude up to the greater of $10 million or 10 times their cost basis from capital gains taxes. The OBBBA increases the exclusion to the greater of $15 million or 10 times the cost basis for QSBS issued after the OBBBA’s enactment date (July 4, 2025). Shareholders who don’t meet the five-year threshold may still get a partial benefit.
And slightly larger companies are now eligible: The OBBBA increased the corporate gross asset test threshold used to determine whether a company is qualified to issue QSBS, from $50 million to $75 million.
Key takeaway: Founders and investors who wish to take advantage of these provisions should investigate the optimal structure of their companies, as only qualifying C corporations are eligible to issue QSBS. They should also think carefully about their own exit strategies, since QSBS eligibility can be affected by the timing and structure of any deal.
Restoration of 100% bonus depreciation
Bonus depreciation allows a business owner to claim an additional first-year depreciation deduction for qualified property (e.g., equipment, vehicles, aircraft, etc.) acquired and placed in service rather than spreading that depreciation out over the life of the asset, encouraging capital investment by reducing taxes.
The OBBBA permanently restores 100% bonus depreciation for qualified property acquired and placed in service on or after January 20, 2025. The TCJA had allowed for 100% bonus depreciation from 2017 to 2022, but that depreciation began phasing down by 20% per year starting in 2023.
The OBBBA goes further than simply restoring 100% bonus depreciation: It allows a 100% bonus depreciation allowance for qualified production property, which is a portion of nonresidential real estate used in qualified production activities.
Key takeaway: Business owners who plan to retain their businesses for the long term should take a close look at bonus depreciation, as it can help reduce taxes and improve cash flow. Those considering a sale or exit should be especially careful: Buyers also receive the benefit of bonus depreciation for assets they acquire. Depending on the deal structure, sellers who have benefited from depreciation may be subject to “recapture” and taxed at a rate that is higher than the 20% long-term capital gains rate.
Domestic research and development (R&D) expensing
Changes to the laws enable business owners to expense their domestic R&D more quickly. Under the TCJA, starting in 2022, domestic R&D expenses had to be capitalized and amortized over five years. The OBBBA allows business owners to immediately deduct 100% of these expenditures, beginning January 1, 2025.
In some circumstances, this applies retroactively. Business owners who capitalized R&D expenses between 2022 and 2024 can fully deduct the unamortized amount in 2025 or pro rata in 2025 and 2026. Small-business owners may even be able to expense domestic R&D costs capitalized after December 31, 2021, by filing amended tax returns.
Key takeaway: Business owners should work with their tax advisors to determine the best approach to expensing their domestic R&D expenditures, including on a retroactive basis.
Noteworthy for business owners
The OBBBA’s hundreds of pages contain other notable provisions that are worth understanding to determine how they may impact you and your business. Please contact a J.P. Morgan advisor for a more comprehensive overview of the OBBBA to learn more about the following:
- Permanent 20% qualified business income deduction for the domestic business profits of certain pass-through entities
- More generous limitations on business interest deductibility
- Permanent extension of the excess business loss limitation for non-corporate taxpayers
- A new 1% floor on the deductibility of corporate charitable contributions
Additionally, a new, permanent round of Qualified Opportunity Zone (QOZ) investment incentives will become available in 2027, allowing investors to defer tax on eligible capital gains and receive other tax benefits if the QOZ investment is held for at least five years.
Business owners (and investors) should also explore the impact of tax changes at the individual income tax level.
The bottom line
A J.P. Morgan advisor, along with your tax and legal advisors, can help you explore your options in order to keep your wealth planning current as legislative changes are made. By staying proactive and informed, business owners can successfully navigate an evolving tax landscape and make better, more strategic decisions.
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