The One Big Beautiful Bill Act: Tax Benefits for Businesses and Individuals
The One Big Beautiful Bill Act (OBBBA) is the most comprehensive tax legislation since the Tax Cuts and Jobs Act of 2017. Signed into law in 2025, it introduces permanent changes to business taxation, individual income tax, retirement savings, and energy policy. For startup founders, small business owners, and the investors who back them, this legislation reshapes the financial planning landscape.
This article provides a structured overview of the provisions that matter most. For specific tax planning strategies, see our companion piece on tax planning under the OBBBA.
Business Tax Provisions
Enhanced Pass-Through Deduction
The OBBBA increases the Section 199A qualified business income (QBI) deduction from 20% to 23%. This applies to income from pass-through entities: sole proprietorships, partnerships, S corporations, and qualifying LLCs.
For startup founders who structure their businesses as pass-through entities, this represents a meaningful reduction in effective tax rates. The deduction remains subject to income-based phase-outs and limitations for specified service trades or businesses, but the higher percentage benefits all qualifying taxpayers.
Who benefits most: Founders with profitable pass-through entities, particularly in non-service sectors. Software companies, e-commerce businesses, and manufacturing startups see the greatest impact.
Full Expensing Restored Through 2031
One of the most significant business provisions is the restoration of 100% bonus depreciation for qualifying property placed in service through December 31, 2031. Under the prior law, bonus depreciation was phasing down by 20 percentage points per year starting in 2023.
This means businesses can immediately deduct the full cost of qualifying equipment, machinery, computers, and certain improvements in the year of purchase rather than depreciating them over their useful life.
Who benefits most: Capital-intensive startups, companies building physical infrastructure, and any business making significant equipment purchases.
R&D Expense Deductions Restored
The OBBBA reverses one of the most controversial provisions from the 2017 tax law by restoring the ability to immediately deduct domestic research and development expenditures. Since 2022, Section 174 had required companies to amortize R&D costs over five years (fifteen years for foreign research), creating significant cash flow challenges for R&D-intensive startups.
Under the new law, domestic R&D expenses are once again fully deductible in the year incurred. Foreign R&D expenses continue to require 15-year amortization.
Who benefits most: Technology startups, biotech companies, and any business with significant engineering or product development spending.
Section 179 Expanded to $2.5 Million
The Section 179 expensing election, which allows businesses to deduct the cost of qualifying assets immediately rather than depreciating them, increases to $2.5 million. The phase-out threshold (above which the deduction begins to decrease dollar-for-dollar) also increases proportionally.
This provision is particularly valuable for small and mid-size businesses that may not qualify for bonus depreciation on certain property types.
Who benefits most: Small businesses making targeted capital investments, particularly in vehicles, furniture, and specialized equipment.
1099 Reporting Simplification
The OBBBA raises the 1099-K reporting threshold for third-party settlement organizations from $600 to $2,000. This reduces the volume of information returns that both platforms and their users must process and reconcile.
For startups operating as marketplaces or platforms that facilitate payments, this simplifies compliance and reduces the administrative burden of issuing 1099-K forms.
Who benefits most: Platform businesses, marketplaces, and gig economy companies. Also beneficial for freelancers and contractors who use payment platforms.
Opportunity Zone Extensions and Expansions
The OBBBA extends and expands the Opportunity Zone program, which provides capital gains tax benefits for investments in designated economically distressed areas. The program, originally set to wind down, receives new designations and extended timelines for qualifying investments.
Who benefits most: Startups located in or considering relocating to Opportunity Zones, and investors with capital gains seeking deferral and reduction strategies.
Individual Tax Provisions
Lower Marginal Tax Rates
The OBBBA makes permanent the individual tax rate reductions that were originally set to expire. The seven-bracket structure is retained with rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Without the OBBBA, rates would have reverted to pre-2018 levels, with the top rate returning to 39.6%.
For high-income founders, the permanence of the 37% top rate represents ongoing savings compared to the alternative.
Higher Standard Deductions
The standard deduction increases to approximately $30,000 for joint filers and $15,000 for single filers, with annual inflation adjustments. The near-doubling of the standard deduction (originally enacted in 2017) is now permanent.
This simplifies tax filing for many individuals and reduces the number of taxpayers who benefit from itemizing deductions.
Senior Standard Deduction Bonus
Taxpayers aged 65 and older receive an additional $6,000 standard deduction on top of the regular amount. This provision acknowledges the fixed-income reality of many retirees and reduces their tax burden.
Child Tax Credit Increase
The child tax credit increases to $2,200 per qualifying child, up from $2,000. The refundable portion also increases, providing greater benefit to lower-income families. Phase-out thresholds remain at $200,000 for single filers and $400,000 for joint filers.
For founders with young families, this provides a modest but meaningful reduction in tax liability.
SALT Cap Modifications
The state and local tax (SALT) deduction cap, originally set at $10,000, increases to $40,000 for qualifying joint filers. The cap is indexed for income, with higher-income taxpayers receiving a reduced cap.
This is among the most impactful individual provisions for founders in high-tax states. The original $10,000 cap disproportionately affected taxpayers in states like California, New York, New Jersey, and Massachusetts, where combined state income and property taxes routinely exceed $10,000.
Tip and Overtime Income Deductions
The OBBBA introduces new above-the-line deductions for tip income and overtime compensation. While these provisions primarily benefit service-industry workers, they may affect startups in the hospitality, food service, and retail sectors that employ tipped or hourly workers.
Retirement and Education Savings
Expanded Retirement Contribution Limits
The OBBBA increases contribution limits for employer-sponsored retirement plans and IRAs, with enhanced catch-up provisions for taxpayers aged 60 to 63. This creates additional opportunities for founders to shelter income through retirement savings vehicles.
Key changes include:
- Higher annual contribution limits for 401(k), 403(b), and similar plans
- Enhanced catch-up contributions for the 60-63 age cohort
- Expanded eligibility for Roth contributions within employer plans
- New provisions allowing student loan repayments to qualify for employer matching contributions
Education Savings Enhancements
The OBBBA expands 529 plan flexibility, allowing limited rollovers to Roth IRAs for beneficiaries who have maintained accounts for at least 15 years. This addresses a long-standing concern about over-funding education savings accounts and provides a pathway to convert unused education funds into retirement savings.
What Founders Should Do Now
The OBBBA creates a new baseline for tax planning. Here are the immediate steps founders should take:
1. Review your entity structure. The enhanced pass-through deduction changes the math for entity selection. If you are currently operating as a C corporation, model the after-tax impact of pass-through treatment under the new rates.
2. Audit your R&D spending. With immediate deductibility restored, ensure you are capturing all qualifying R&D expenditures. Many startups undercount by excluding activities that legally qualify.
3. Reassess your SALT strategy. If you have been using a pass-through entity tax election to mitigate the SALT cap, the new $40,000 cap may change the optimal approach.
4. Plan capital expenditures. With full expensing available through 2031, there is less urgency to accelerate purchases -- but the certainty of the provision allows for better long-term planning.
5. Update your financial model. Tax rate changes affect cash flow projections, runway calculations, and investor returns. Ensure your financial model reflects the new tax landscape.
6. Coordinate personal and business planning. The OBBBA affects both business and individual tax positions. Founders should work with advisors who understand both sides and can optimize across them.
Looking Ahead
The OBBBA provides a period of relative tax policy stability. Most provisions are permanent or extend through at least 2031, giving businesses a clear planning horizon.
At Rubric Financial, we help founders navigate the intersection of business finance and tax strategy. Through our fractional CFO services and the ClariFi platform, we build comprehensive financial strategies that account for the full scope of the OBBBA -- from business deductions to personal tax planning to retirement optimization.
The legislation is complex, but the opportunities are real. The founders who act decisively will capture the most value.