1. Where we are in the process
On July 04, 2025, the President signed the One Big Beautiful Bill Act.
Because OBBB is a budget‑reconciliation bill, it required only simple majorities in both chambers and cannot be filibustered in the Senate. Key tax sections take effect for taxable years beginning after December 31, 2025, giving taxpayers roughly 18 months to plan.
2. High‑level tax highlights
| Provision | Current law | OBBB change |
| Individual brackets | 2017 Tax Cuts & Jobs Act (TCJA) rates expire 12/31/2025 | TCJA rates made permanent |
| §199A pass‑through deduction | Also sunsets after 2025 | Permanent 20 % deduction for qualified business income |
| SALT deduction | $10k cap through 2025 | Cap raised to $40k starting 2026 |
| Bonus depreciation | Phasing to 20 % by 2026 | Restored to 100 % and made permanent |
| R&D expensing (§174) | 5‑year amortization required | Full immediate expensing reinstated |
| “No‑tax‑on‑tips & overtime” | Ordinary wage income | New above‑the‑line deductions: up to $25k tips & $12.5k overtime |
| LIHTC | 12.5 % temporary bump (expired) | Permanent 12 % LIHTC increase and deeper income averaging rules |
3. How the bill affects
e‑commerce and service businesses
- Cash‑flow acceleration – Immediate expensing of equipment, warehouse fixtures, SaaS, and even certain AI/automation investments can drop effective federal rates below 20 %.
- Pass‑through certainty – LLCs, partnerships, and S‑corps can build multi‑year forecasts without worrying about the §199A “sunset cliff.” Consider revisiting reasonable‑compensation studies and guaranteed‑payment structures.
- Payroll system updates – Hospitality, beauty, and creator‑economy platforms that facilitate tipping need new W‑2 coding to segregate deductible tip income. Overtime‑heavy logistics operations (think holiday fulfillment centers) may gain sizable employee‑level deductions but must maintain contemporaneous time‑clock records.
- State‑tax strategy – The bigger SALT cap offers relief for owners in CA, NY, NJ, IL, etc., but also reduces the benefit of existing pass‑through entity‑level tax (PTET) work‑arounds. Re‑measure your 2026 estimated payments.
4. Key non‑tax items you may still care about
- Medicaid and SNAP cuts – Expect pressure on state budgets that could ricochet into sales‑tax audits and marketplace‑facilitator enforcement.
- Energy‑credit rollbacks – Clean‑energy incentives from the 2022 Inflation Reduction Act are largely repealed; solar or EV infrastructure projects may lose federal credits after 12/31/2025. Plan purchase timelines accordingly.
5. Action checklist (July–December 2025)
| Timeline | Recommended action |
| July–August | Meet with your tax advisor to model 2026 liability under both scenarios (bill signed vs. veto). |
| September | Update Chart of Accounts for new deduction categories (tips, overtime) and add SALT‑cap tracking fields. |
| October | Revisit entity structure; consider converting sole proprietorships to S‑corps to capture permanent §199A deduction. |
| November | Expand fixed‑asset plans—pull 2026 purchases (robots, forklifts, servers) into Q4 2025 to leverage 100 % bonus depreciation. |
| December | Finalize year‑end payroll adjustments and provide staff training on new tip/overtime substantiation rules. |
6. What could still change?
Although reconciliation bills rarely face court challenges on procedure, technical corrections are common. Areas most likely to see tweaks:
- Anti‑abuse guardrails for the new tip deduction
- Clarification of SALT cap phase‑out thresholds for married‑filing‑separately taxpayers
- Interaction of permanent bonus depreciation with existing §179 expensing limits
7. Bottom line
The OBBB Act—once signed—will lock in the last eight years of tax policy, add new breaks aimed at wage‑earners, and create lasting planning opportunities for small‑business owners. But the window to act before the 2026 effective date is shorter than it looks. Get projections in motion now so you’re not making six‑figure decisions in the December rush.
