Tax Planning Strategies for 2025 Under the One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OBBBA) represents the most significant overhaul of the U.S. tax code in nearly a decade. For startup founders and small business owners, the legislation introduces a mix of expanded deductions, new credits, and time-sensitive provisions that demand immediate attention.

This is not a theoretical overview. Below are the practical strategies that founders and their financial advisors should be evaluating right now.

Understanding the Landscape

The OBBBA modifies provisions across individual income tax, business taxation, retirement savings, and energy credits. Many of these changes are effective immediately or phase in over the next two to three years, with some carrying explicit sunset dates.

For startups and their founders, the most impactful changes fall into six categories: pass-through deductions, equipment expensing, R&D treatment, state and local tax (SALT) relief, information reporting simplification, and energy incentives.

Strategy 1: Maximize the Enhanced Pass-Through Deduction

The OBBBA increases the qualified business income (QBI) deduction under Section 199A from 20% to 23% for qualifying pass-through entities. This applies to sole proprietors, partnerships, S corporations, and LLCs taxed as pass-throughs.

What this means in practice:

For a founder receiving $300,000 in pass-through income from their startup, the deduction increases from $60,000 to $69,000 -- a direct reduction in taxable income of $9,000. At a 37% marginal rate, that translates to approximately $3,330 in annual tax savings.

Action items:

Review your entity structure. If you are operating as a C corporation but qualify for pass-through treatment, model the after-tax impact of converting.
Ensure your business qualifies for the full deduction. The QBI deduction has income thresholds and specified service trade or business (SSTB) limitations that may cap the benefit.
Coordinate with your fractional CFO to model the interaction between the QBI deduction and other provisions, including SALT changes.

Strategy 2: Accelerate Equipment and Software Purchases

The OBBBA restores and extends 100% bonus depreciation through 2031, reversing the phase-down that began under the Tax Cuts and Jobs Act. Additionally, the Section 179 expensing limit increases to $2.5 million with an expanded phase-out threshold.

What this means in practice:

Startups that purchase servers, computers, office equipment, or qualifying software can deduct the full cost in the year of purchase rather than depreciating over multiple years. For a startup spending $500,000 on infrastructure buildout, this creates an immediate $500,000 deduction.

Action items:

Audit your planned capital expenditures for the next 12 months. If purchases were scheduled for 2026 or 2027, evaluate whether accelerating them into 2025 creates a tax benefit.
Document all qualifying property carefully. The IRS has specific rules about what qualifies for bonus depreciation versus Section 179 treatment.
Consider the cash flow trade-off. Accelerating purchases requires upfront cash but reduces tax liability. Model both scenarios.

Strategy 3: Protect R&D Deductions

One of the most impactful provisions for technology startups is the treatment of research and development expenditures. The OBBBA restores the ability to fully deduct domestic R&D costs in the year incurred, reversing the Section 174 amortization requirement that forced companies to spread deductions over five years.

What this means in practice:

A startup spending $1 million annually on domestic R&D can now deduct the full $1 million in the current year rather than $200,000 per year over five years. This dramatically improves cash flow and reduces effective tax rates for R&D-intensive companies.

Action items:

Conduct a Section 174 study to identify all qualifying R&D expenditures. Many startups undercount their R&D by excluding qualifying activities such as prototype development, testing, and certain engineering work.
Review the interaction between the R&D deduction and the R&D tax credit (Section 41). These are separate provisions that can be used together, but coordination is required.
Ensure foreign R&D is tracked separately. The OBBBA restores immediate deduction only for domestic R&D; foreign research costs are still amortized over 15 years.

Strategy 4: Leverage SALT Deduction Increases

The OBBBA raises the state and local tax (SALT) deduction cap for qualifying households. Under the new rules, the SALT cap increases to $40,000 for joint filers meeting certain income thresholds, up from the previous $10,000 cap.

What this means in practice:

Founders in high-tax states like California, New York, and Massachusetts have been disproportionately impacted by the SALT cap. A founder paying $50,000 in state income tax and $25,000 in property tax was previously limited to a $10,000 federal deduction. Under the new rules, qualifying filers can deduct up to $40,000.

Action items:

Calculate your total SALT burden across state income tax, local income tax, and property tax.
Determine whether you meet the income thresholds for the enhanced cap. The $40,000 cap phases down for higher-income taxpayers.
If you are using a pass-through entity tax (PTET) election to work around the SALT cap, reassess whether the direct deduction is now more favorable. Several states enacted PTET provisions specifically to mitigate the SALT cap, and the math may now favor the standard deduction approach.

Strategy 5: Simplify Information Reporting

The OBBBA raises the 1099-K reporting threshold from $600 to $2,000 for third-party settlement organizations. While this primarily affects platforms and marketplaces, it has administrative implications for startups that use multiple payment processors.

What this means in practice:

Startups receiving payments through platforms like Stripe, PayPal, or Square will receive fewer 1099-K forms, reducing reconciliation complexity. More importantly, this change reduces the compliance burden for startups that also operate as platforms and issue 1099s to their own users or contractors.

Action items:

Update your accounts payable processes to reflect the new threshold.
Review your 1099 issuance procedures if you operate a marketplace or platform.
Maintain documentation for all transactions regardless of reporting thresholds. The change affects reporting requirements, not taxability -- income is still taxable even if no 1099 is issued.

Strategy 6: Capture Time-Sensitive Energy Credits

The OBBBA modifies and in some cases accelerates the expiration of clean energy tax credits. Several credits that were extended under the Inflation Reduction Act now carry earlier sunset dates under the OBBBA.

Key changes:

The clean vehicle credit retains its current structure but faces potential modifications in qualifying criteria starting in 2026.
Energy-efficient commercial building deductions (Section 179D) remain available but with adjusted qualifying standards.
The investment tax credit (ITC) and production tax credit (PTC) for renewable energy retain their current phase-down schedules but with narrowed eligibility for certain project types.

Action items:

If you are planning facility improvements or energy-efficient building modifications, evaluate the credit schedule and consider accelerating projects.
Review your fleet strategy. If vehicle purchases qualify for clean vehicle credits, the 2025 tax year may offer the most favorable terms.
For startups in the cleantech space, model the impact of credit changes on your customers' purchase decisions. This may affect your revenue projections.

Strategy 7: Plan Estate and Succession Transfers

For founders with significant equity holdings, the OBBBA increases the estate and gift tax exemption to approximately $15 million per individual ($30 million for married couples), up from the current $13.6 million.

What this means in practice:

Founders can transfer larger amounts of wealth -- including startup equity -- to heirs or trusts without triggering estate or gift tax. For a founder holding $20 million in startup equity, the increased exemption could eliminate estate tax liability entirely.

Action items:

Review your estate plan with a qualified estate planning attorney. If you established trusts or gifting strategies under the prior exemption, the higher threshold may allow you to simplify your approach.
Consider gifting appreciated startup equity now while exemption levels are elevated. The OBBBA provisions are currently set to apply through at least 2031, but political changes could modify the timeline.
Coordinate with your fractional CFO to model the tax impact of various equity transfer scenarios, including the interaction with capital gains treatment.

Building a Coordinated Tax Strategy

The most important takeaway from the OBBBA is that these provisions do not operate in isolation. The interaction between the enhanced QBI deduction, restored R&D expensing, SALT cap changes, and depreciation rules creates a complex optimization problem.

A startup founder who is also a pass-through entity owner, R&D spender, and high-SALT-state resident could see dramatically different outcomes depending on how these provisions are layered.

This is precisely why having a fractional CFO with tax planning expertise is critical. At Rubric Financial, we work with founders to model the full picture -- not just individual provisions -- and build tax strategies that account for the interactions between business and personal tax positions.

The OBBBA creates real opportunities for startups and their founders. The window to act on many of them is narrow. Start the conversation with your financial advisor now.