How the Big Beautiful Bill could impact your business

The Act makes the Qualified Business Income deduction permanent. This is great news as many businesses owners have benefited from the QBI deduction on the front page of your individual return. The deduction reduced your taxable income which may have lowered the tax bracket you paid all your income.

The Act makes additional first-year (bonus) depreciation for certain qualified property permanent at 100% (under prior law, it was to phase out to zero ). This provision is effective for property acquired after Jan. 19, 2025. There is also a new 100% bonus depreciation provision for “qualified production property” (QPP, which is certain non-residential real property used in the manufacturing, production or refining of certain tangible personal property). This QPP provision is effective for property placed in service after July 4, 2025. Bonus depreciation has benefited many businesses who purchase large equipment and are over the phase out limits for 179 expensing (see next section). Keep in mind Minnesota still requires you to spread out the depreciation over 5 years.

For property placed in service after 2024, the expensing limits are increased to $2,500,000 and the phasedown threshold is increased to $4,000,000. Again, great news for businesses who purchase large equipment.

Beginning in 2026, business expense deductions are disallowed for employer-provided meals that are excluded from an employee’s income or are de minimis fringe benefit.

The Act provides that gain on the “applicable percentage” (50% for stock held for 3 years, 75% for stock held for 4 years, 100% for stock held for 5 years) is eliminated for QSBS acquired after July 4, 2025. Also, the gain exclusion threshold is increased from $10 million to $15 million and the $50 million aggregate gross asset limit is increased to $75 million (subject to inflation adjustments).

The advanced manufacturing investment credit (also known as the semiconductor credit or the CHIPS credit) on qualified investments in an advanced manufacturing facility built before Jan. 1, 2027 is increased to 35% (up from 25%) for property placed in service after 2025.

The Act allows immediate deduction of domestic research or experimental expenditures paid or incurred in tax years beginning after December 31, 2024. Foreign research or experimental expenditures must continue to be capitalized and amortized over 15 years. This will benefit many businesses who incur expenditures that have previously been added back and amortized over multiple years.

For payments made after 2025, the reporting thresholds for Forms 1099-NEC and 1099-MISC are increased from $600 to $2,000. This means less burden on business owners to send out 1099’s to vendors by January 31 each year.

For sales or exchanges occurring after July 4, 2025, sellers of qualified farmland property may elect to pay capital gains tax on the sale in four equal annual installments. The first payment is due with the return for the year in which the sale occurs, with the remaining payments being due with the successive years’ returns (but if a payment is missed, the balance is due immediately).

The Act imposes a new 1% floor (in addition to the 10% ceiling) on corporate charitable deductions for post-2025 tax years. This new rule is for C Corporation entities.

Under the Act, the energy efficient commercial building deduction terminates for the cost of energy efficient commercial building property whose construction begins after June 30, 2026.

The Act terminates the credit for wind energy components produced and sold after Dec. 31, 2027. It also subjects pre-Act applicable critical minerals to a new phaseout schedule and tightens the rules regarding foreign entities.

Energy efficient home improvement and new energy efficient home credits: The energy efficient home improvement credit is terminated for property placed in service after 2025. The new energy efficient home credit terminates for any qualified new energy efficient home acquired after June 30, 2026.

Residential clean energy credit: The residential clean energy expenditures credit is terminated for any expenditures made after 2025.

Clean vehicle credits: The credits for new and previously owned clean vehicles terminate for vehicles acquired after Sept. 30, 2025. The credit for qualified commercial clean vehicles also terminates for vehicles acquired after Sept. 30, 2025.

Alternative fuel vehicle refueling property credits: The credit for “alternative fuel vehicle refueling property” (such as an EV charger) terminates for property placed in service after June 30, 2026.