5 OBBBA Tax Breaks That Could Save Your Business Thousands
The Biggest Small Business Tax Overhaul Since 2017 Just Kicked In
The One Big Beautiful Bill Act (OBBBA) is now law — and it contains the most significant tax changes for small businesses since the 2017 Tax Cuts and Jobs Act. Signed on July 4, 2025, the bill permanently extends key deductions that were set to expire, raises critical spending limits, and creates new credits that put real cash back into business owners' pockets.
Yet according to a recent survey by the National Small Business Association, nearly 40% of small business owners are either unaware of the new provisions or unsure how to take advantage of them. That's money left on the table — potentially tens of thousands of dollars per year.
As covered by Accounting Today, 2026 is shaping up to be a transformative year for business finances. Here are the five OBBBA tax breaks every small business owner needs to understand and claim.
1. The QBI Deduction Is Now Permanent
The Qualified Business Income (QBI) deduction was the crown jewel of the 2017 tax reform for pass-through businesses — LLCs, S corporations, sole proprietorships, and partnerships. It lets eligible owners deduct up to 20% of their qualified business income before calculating their personal tax bill.
The problem? It was set to expire at the end of 2025.
The OBBBA makes the QBI deduction permanent. No more sunset clause. No more uncertainty. If you're a pass-through entity, you can count on this deduction for every tax year going forward.
What's New
- The deduction is now permanent for all eligible pass-through entities
- A new minimum deduction of $400 applies to anyone with at least $1,000 of qualified business income — even if your deduction would otherwise be phased out due to income limits
- The income thresholds for the phase-out continue to adjust for inflation
What This Means in Dollars
For a sole proprietor earning $150,000 in qualified business income, the QBI deduction is worth $30,000 off their taxable income. At a 24% marginal tax rate, that's $7,200 in tax savings — every single year, permanently.
| Business Structure | QBI Eligible? | Annual QBI on $150K Income | Tax Savings (24% bracket) |
|---|---|---|---|
| Sole Proprietorship | Yes | $30,000 | $7,200 |
| LLC (single-member) | Yes | $30,000 | $7,200 |
| S Corporation | Yes (on reasonable salary split) | Varies | Varies |
| Partnership | Yes (per partner) | $30,000 per partner | $7,200 per partner |
| C Corporation | No | N/A | N/A |
2. 100% Bonus Depreciation Is Back
Under the original TCJA, businesses could deduct 100% of the cost of qualifying assets in the year they were purchased. But that benefit had been phasing down — dropping to 80% in 2023, 60% in 2024, and 40% in 2025. It was on track to disappear entirely by 2027.
The OBBBA restores 100% bonus depreciation retroactively and makes it permanent.
This means if you buy equipment, vehicles, furniture, computers, or other qualifying property in 2026, you can deduct the entire cost in year one instead of spreading it across five, seven, or more years.
Why This Matters for Cash Flow
Bonus depreciation is the single most powerful cash flow tool in the tax code. Here's why:
- A $50,000 equipment purchase generates a $50,000 deduction in year one under 100% bonus depreciation
- At a 24% tax rate, that's $12,000 in immediate tax savings you can reinvest
- Without bonus depreciation, you'd only deduct roughly $10,000 in year one (using standard five-year depreciation), saving just $2,400
The difference is $9,600 in cash flow that stays in your business right now, when you need it most.
Qualifying Assets
- Machinery and equipment
- Computer hardware and software
- Office furniture
- Vehicles used for business (subject to luxury auto limits)
- Qualified improvement property (building interiors, HVAC, roofing)
- Land improvements (parking lots, landscaping, fences)
3. Section 179 Expensing Limit Jumps to $2.5 Million
Section 179 lets small businesses immediately expense qualifying asset purchases instead of depreciating them over time. It's similar to bonus depreciation but with important differences — primarily that it has a spending cap and a phase-out threshold.
The OBBBA raises the Section 179 limit from $1.16 million to $2.5 million, with the phase-out beginning at $4 million in total equipment purchases (up from $2.89 million).
Section 179 vs. Bonus Depreciation: When to Use Which
| Feature | Section 179 | Bonus Depreciation |
|---|---|---|
| 2026 Deduction Limit | $2.5 million | Unlimited |
| Phase-out Starts At | $4 million in purchases | No phase-out |
| Eligible Assets | New and used property | New and used property |
| Can Create a Net Loss? | No — limited to taxable income | Yes |
| Best For | Profitable businesses under the cap | Businesses of any size, especially those needing loss carryforwards |
Pro tip: Use Section 179 first (since it's the more flexible deduction for profitable businesses), then apply bonus depreciation to any remaining qualifying purchases.
4. Employer Childcare Credit Triples
This one flies under the radar, but it's significant for any business that provides or supports childcare for employees.
The OBBBA increases the maximum employer-provided childcare facility credit from $150,000 to $500,000 and raises the credit rate from 25% to 40% of qualified expenses. For eligible small businesses, the maximum credit jumps to $600,000 at a 50% rate.
Why Small Businesses Should Pay Attention
You don't need an on-site daycare to qualify. The credit applies to:
- Contributions to local childcare facilities your employees use
- Childcare referral services for employees
- Partnerships with childcare providers that reserve spots for your team
In a tight labor market where 57% of small businesses report difficulty hiring, offering childcare support isn't just a tax play — it's a recruiting and retention strategy that now comes with a substantially larger tax credit.
5. Paid Family and Medical Leave Credit Made Permanent
The employer credit for paid family and medical leave (PFML) was another provision teetering on the edge of expiration. The OBBBA makes it permanent.
Businesses that voluntarily offer paid family and medical leave to employees earning below a certain threshold can claim a credit of 12.5% to 25% of wages paid during the leave period. The percentage scales based on how generous the leave policy is — offering 100% wage replacement earns the full 25% credit.
The Math for a Small Business
If you pay an employee $1,000 per week during a four-week family leave, that's $4,000 in wages. At the 25% credit rate, you get a $1,000 tax credit — directly reducing your tax bill dollar for dollar.
Multiply that across several employees per year and the credit becomes meaningful, especially for businesses with 10-50 employees where leave policies have the greatest retention impact.
How to Make Sure You're Claiming Everything
Here's the uncomfortable truth: most small business owners miss at least one deduction or credit they're entitled to. The OBBBA added complexity to an already complicated tax code, and the interplay between QBI, bonus depreciation, Section 179, and the various credits requires careful planning.
The businesses that capture the most value from these changes share three habits:
- They track finances in real time, not once a quarter or once a year
- They model tax scenarios before making big purchases, not after
- They have a financial advisor who understands their specific situation, not generic advice from a blog post
This is exactly where AI-powered financial tools earn their keep. Profit Leap's CFO bot connects directly to your QuickBooks, Xero, or Stripe accounts to monitor your finances continuously. It can model how a major equipment purchase affects your tax position, flag when you're approaching Section 179 thresholds, and help you understand your QBI deduction in real time — not just at tax time.
And when the questions get complicated — like whether your specific business structure qualifies for the full QBI deduction or how to optimize between Section 179 and bonus depreciation — a CPA backstop is available for expert guidance. It's like having a fractional CFO available 24/7, at a fraction of the cost of hiring one.
Don't Leave Money on the Table
The OBBBA delivers real, permanent tax relief for small businesses. But relief only works if you claim it. The QBI deduction alone could save a typical small business owner $5,000-$15,000 per year. Combine that with strategic use of bonus depreciation and Section 179, and you're looking at tens of thousands in tax savings and dramatically improved cash flow.
The window to plan is now — not in December, not at tax time. The businesses that benefit most from these changes are the ones that build them into their financial strategy from day one.
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