What DMV Business Owners Need to Know About the One Big, Beautiful Bill Act (OBBBA)
Key Takeaways
The qualified business income deduction now includes a $400 minimum and higher income thresholds, benefiting more small business owners.
Full bonus depreciation is back, making it easier to write off large equipment and property investments immediately.
Immediate expensing of R&D costs is restored, with retroactive deductions available for many small businesses.
The reporting threshold for 1099s increases to $2,000, reducing paperwork for contractors and gig workers.
Clean energy credits are ending, so any green upgrades should be completed before September 30, 2025.
Schedule a consult with a tax strategist to make sure your business takes full advantage of OBBBA starting in 2025.
Recent bills like the OBBBA introduce complex tax-related provisions that require careful compliance.
Introduction to the Law
The One Big Beautiful Bill Act—often called the Big Beautiful Bill Act or simply the Beautiful Bill—marks a major turning point in federal income tax policy. Here's what you need to know.
If you run a business in the District of Columbia, Maryland, or Virginia, the One Big, Beautiful Bill Act (OBBBA) could significantly change how you approach your federal income tax strategy starting in the 2025 tax year. Signed into law by President Trump on July 4, 2025, this bill is the most sweeping overhaul of the tax code since the 2017 Tax Cuts and Jobs Act. The law permanently extends several popular business tax credits, adjusts deduction phases, and raises key thresholds for tax reporting, all with the goal of encouraging economic growth. The OBBBA is expected to have a significant impact on overall tax revenue, shaping government funding and fiscal planning, while also influencing the broader landscape of taxation through reforms to income tax, business tax, and green energy tax credits.
Here’s a breakdown of the key provisions DMV businesses need to understand, how they impact your taxable income, and what you should consider doing before the end of the year.
Qualified Business Income Deduction Expands
The Qualified Business Income (QBI) deduction under current law remains at 20%, reducing the taxpayer's taxable income by allowing eligible taxpayers to deduct a portion of their QBI from their total income.
The phase-in range increases to $75,000 for individuals and $150,000 for joint returns.
A new $400 minimum deduction applies to taxpayers earning at least $1,000 in QBI with material participation.
What this means for you:
If you own a pass-through entity, this permanently extended deduction lowers your federal income tax. It’s especially useful for gig workers, solopreneurs, and small businesses with modest gross income who previously didn’t meet the income limits.
Bonus Depreciation Returns to 100%
The bill reinstates full bonus depreciation for capital investments placed in service after January 19, 2025.
This also applies to specified agricultural and manufacturing property.
What this means for you:
You can now fully deduct the cost of large capital investments, including qualified production property and machinery, all in the same tax year—great for improving cash flow and reducing your taxable year burden.
Section 179 Expensing Limit Raised
The deduction cap rises to $2.5 million, with a phase-out threshold of $4 million.
These numbers will be adjusted for inflation beginning in 2026.
What this means for you:
If you’re planning to purchase vehicles, software, or office equipment, this is your chance to write off more upfront and preserve liquidity.
Immediate Expensing of Domestic Research
Domestic research and experimental (R&E) expenses can now be deducted immediately starting in 2025.
Small businesses with less than $31 million in average annual gross income can apply this retroactively to 2022.
Taxpayers can also accelerate remaining deductions over one or two years.
What this means for you:
If you operate in biotech, higher education R&D, or product innovation, this change can unlock capital from past expenses and reshape your federal tax liability.
Manufacturing Property Depreciation Bonus
Businesses can deduct 100% of qualified production property used in manufacturing.
Property must be placed in service between July 4, 2025, and January 1, 2031.
What this means for you:
This incentive targets manufacturers in places like Prince George’s County or Loudoun County. It encourages local production and investment in new facilities without waiting years to recover the cost through depreciation.
EBITDA-Based Interest Deduction
Business interest deductibility now uses EBITDA (earnings before interest, taxes, depreciation, and amortization) as the base for adjusted taxable income. The new rules also clarify the deductibility of auto loan interest and interest paid on car loans, making it clear how these types of interest are treated for tax purposes. Interest paid on qualifying car loans may be deductible under the updated law.
What this means for you:
This makes it easier for growing businesses with financing needs to deduct more of their interest expenses, which is important if you’re scaling up or managing real estate loans.
1099 Reporting Thresholds Increase
Starting in 2026, businesses only need to issue 1099-MISC or 1099-NEC if payments exceed $2,000.
This change affects contractors, gig workers, and businesses across industries.
What this means for you:
You’ll likely issue fewer 1099s, reducing compliance work and lowering the chance of penalties for missed forms.
Form 1099-K Rules Rolled Back
Reporting is no longer required unless payees earn more than $20,000 and complete 200+ transactions.
This undoes changes introduced by the House version of the American Rescue Plan.
What this means for you:
Your business still needs to track income through platforms like Venmo or PayPal, but fewer third-party forms will be generated, easing administrative burdens.
Capital Gains from Farmland Sales Get an Installment Option
You can now spread the capital gains tax from selling qualified farmland to a working farmer over four years.
What this means for you:
If you’re a family-owned farm in rural Virginia or Maryland looking to sell to a local farmer, this spreads the tax hit and keeps more working farmland in local hands.
Corporate Charitable Deduction Floor
Starting in 2026, corporations can only deduct charitable contributions that exceed 1% of taxable income.
The law also introduces a new tax credit for donations to scholarship granting organizations, which may require additional planning for corporations.
What this means for you:
This change narrows the deduction for businesses using philanthropy as part of their public identity and requires tighter planning.
Qualified Small Business Stock (QSBS) Gets Tiered Exclusion
Exclusion applies as follows: 50% after 3 years, 75% after 4 years, and 100% after 5 years.
What this means for you:
If you’re a founder or early-stage investor in a DMV-based startup, this revised capital gains exclusion rewards long-term investment in qualified stock.
Employer Childcare Credit Expanded
Credit limit increases to $500,000 ($600,000 for small businesses).
Credit rate rises to 40% (50% for qualified small businesses).
What this means for you:
In high-cost regions like Northern Virginia and DC, this makes employer-sponsored childcare more affordable and boosts your employee benefits package.
New Deductions for Cash Tips and Overtime Pay
From 2025–2028, workers can deduct up to $25,000 in qualified tips and $12,500–$25,000 in qualified overtime compensation.
What this means for you:
Though the deduction goes to employees and contractors, your business must now track tip income and overtime pay more closely—especially in hospitality, food service, and personal care.
Clean Energy Tax Credits Are Being Phased Out
Credits for electric vehicles, energy-efficient buildings, and commercial clean vehicles end after September 30, 2025.
The phaseout of these credits may increase energy costs for businesses and consumers.
The termination includes items originally enacted through the Inflation Reduction Act.
What this means for you:
If you’re considering solar panels or fleet upgrades, act fast. Once these business tax credits expire, the cost of green investments will increase.
Social Security and Retirement Changes
The Big Beautiful Bill Act brings several important updates to Social Security and retirement planning that business owners should note. The law adjusts the taxable wage base for Social Security, which may affect payroll tax calculations for both employers and employees. Additionally, the Act introduces new incentives for retirement savings, including expanded deduction limits for contributions to qualified retirement plans and increased catch-up contributions for older workers. These changes are designed to encourage long-term savings and provide greater flexibility for business owners looking to enhance their retirement benefits packages.
What this means for you:
For those managing payroll or considering new retirement plan options, it’s important to review how these updates could impact your business’s tax liability and your employees’ future financial security.
Economic Growth Opportunities for DMV Businesses
The Big Beautiful Bill Act is designed to spur economic growth, and DMV businesses are well-positioned to take advantage of its incentives. With expanded tax credits for capital investment, increased deductions for research and development, and new opportunities to deduct car loan interest and overtime pay, local companies can reinvest in their operations and workforce. The law’s focus on supporting small business, manufacturing, and innovation means that DMV entrepreneurs can leverage these tax policy changes to expand, hire, and compete more effectively.
What this means for you:
Whether you’re planning to upgrade equipment, invest in employee training, or explore new markets, the Beautiful Bill Act provides a range of tools to help you grow while managing your federal income tax burden. Now is the time to assess your business strategy and align it with the new opportunities created by this landmark legislation.
Higher Education Benefits for Business Owners and Employees
The Big Beautiful Bill Act enhances several higher education tax benefits that can directly support business owners and their teams. The law increases the annual deduction cap for qualified tuition and education expenses, making it easier to deduct costs related to continuing education, professional certifications, and degree programs. It also expands eligibility for education-related tax credits, allowing more employees and their dependents to reduce their federal income tax through credits for tuition, fees, and certain educational supplies.
What this means for you:
For businesses that offer tuition assistance or invest in employee development, these changes can lower overall taxable income and make higher education more accessible. Be sure to review your company’s education benefits and consider how these new provisions can be leveraged to attract and retain top talent.
Bill Act Implementation: What to Expect and When
With the passage of the Big Beautiful Bill Act, business owners should prepare for a phased rollout of its key provisions. Most major changes, including new deduction limits, tax credits, and reporting thresholds, take effect for the 2025 tax year, with some retroactive options available for prior years.
The IRS is expected to issue detailed guidance and updated forms in the coming months, so it’s important to stay informed and work closely with your tax advisor. Some provisions, such as the phaseout of clean energy credits and adjustments to local tax coordination, will be implemented over a longer timeline.
To ensure compliance and maximize your benefits under the new law, set up a timeline for reviewing your tax strategy, updating payroll systems, and training your finance team on the latest requirements.
Next Steps for DMV Business Owners
There are other changes in the bill, including updates to local tax coordination, debt ceiling policy, international business income rules, and spending cuts linked to reconciliation instructions. While some are political gimmicks tied to reconciliation pursuant to budget rules, most will directly affect your taxable income and future planning.
Here’s what you should do now:
Review your capital investment plans
Evaluate charitable giving under the new deduction cap
Adjust reporting practices for tips, overtime, and contractor payments
Look at research expense deductions going back to 2022
Prepare for the phaseout of green energy credits
Consider itemized deductions in light of possible changes to the SALT cap
Business owners should also review their processes to prevent improper payments, especially when claiming new or expanded tax credits, to ensure compliance and reduce the risk of waste or fraud.
This is a major tax policy shift that touches nearly every business and taxpayer.
If you’re not sure how the One Big, Beautiful Bill Act will affect your business, now is the time to schedule a consult with tax strategist Steve Thienel. He’ll help you take full advantage of the Beautiful Bill and structure your 2025 strategy to reduce your tax burden, optimize deductions, and plan for the future with as much clarity as possible.
About the Author
Steve Thienel, Esq.
Steve Thienel is a business, estate planning, and tax attorney and the founder of Thienel Law, based in the DMV area. He helps entrepreneurs and business owners with entity formation, contracts, regulatory compliance, and long-term growth strategies. As a seasoned tax controversy attorney, Steve also represents clients in disputes with the IRS and state tax authorities. With over two decades of experience, he delivers clear, practical legal guidance tailored to the real-world challenges business leaders face.