Need the Trump tax cuts 2025 explained for small business?
The “Big Beautiful Bill” (as named by President Trump) passed just before a July deadline in 2025.
This legislation passed initially as a Senate bill.
These new Trump-era tax cuts have sparked heated debate, some calling them a windfall for businesses, others warning of hidden costs.
But beyond the headlines and political noise, what do these changes really mean for you as a woman entrepreneur?
Whether you run a thriving online shop, a growing service-based business, or a local boutique, these tax shifts could impact your take-home pay, hiring decisions, and even how you plan for retirement.
Let’s break down exactly what you need to know, so you can make smart, strategic moves to protect your profits and keep growing with confidence.
How the 2025 Tax Reform Changes the Game for Small Businesses
The 2025 tax reform, officially dubbed the “One Big Beautiful Bill Act”, ushers in a new era for small businesses.
By extending many of the Tax Cuts and Jobs Act (TCJA) provisions, this bill keeps the lower corporate income tax rate at 21%, giving small businesses more breathing room to reinvest and grow.
The increased standard deduction also remains in place, simplifying tax filing and potentially lowering your overall tax burden.
But that’s not all.
The new law introduces fresh tax breaks designed to help entrepreneurs, like the ability to deduct up to $10,000 in interest paid on auto loans used for business purposes.
Plus, the child tax credit gets a boost, now up to $2,200 per child, which can make a real difference for business owners with families.
However, it’s not all smooth sailing.
The bill also phases out some clean energy tax breaks and raises tariffs on certain imports.
This could impact your supply chain or costs if you rely on imported goods.
Navigating these changes means reviewing your tax strategy, looking for new opportunities to save, and staying alert to how these shifts might affect your bottom line.
The “Big Beautiful Bill” is packed with both opportunities and challenges—so we’ll walk through it to make sure you’re making the most of every tax break available.
Tax Brackets and Rates: What’s New for Small Business Owners
When it comes to income taxes, the 2025 tax reform keeps the familiar seven-bracket system, with rates ranging from 10% to 37%.
What’s changed?
The income thresholds for each bracket have been adjusted upward to account for inflation. This could mean you stay in a lower tax bracket even as your business grows.
For example, single filers now hit the 24% tax rate at around $197,300 in taxable income, while married taxpayers filing jointly reach that rate at about $394,600*.
(*Final numbers should be confirmed with the IRS official tables.)
For small business owners, understanding where your taxable income falls on the new income tax brackets is key to smart tax planning.
And if you have employees who earn tips, think restaurants, salons, or hospitality, there’s a new tax break: workers can now exclude up to $25,000 in tip income from federal income tax liability through 2028.
However, this tip income is still subject to Social Security and Medicare taxes.
This not only benefits your team but could also help with employee retention and morale.
Stay proactive by reviewing your after-tax income projections and making sure you’re taking advantage of every available tax break.
The right moves now can help you keep more of what you earn, no matter where you fall on the income scale.
Tax Credits: Hidden Gems for Small Businesses
Tax credits can give a boost to small businesses, and the 2025 tax reform has introduced some valuable new options.
The expanded child tax credit, now $2,200 per child, offers meaningful relief for business owners juggling family and entrepreneurship.
If you’re investing in the future, there’s also a new tax credit for renewable energy investments, like solar panels or wind turbines, allowing you to claim up to 30% of your investment as a credit against your income tax.
But be aware: not all tax credits are created equal.
The bill tightens eligibility for some popular credits, such as the earned income tax credit and the premium tax credit.
It’s important to double-check the requirements before counting on these savings.
Review your eligibility for all available tax credits so you don’t leave money on the table.
These hidden gems can make a real difference in your after-tax income.
Estate and Gift Tax: What Business Owners Need to Know
If you’re thinking about the future of your business aned your family, the 2025 tax reform brings some important updates to estate and gift tax provisions.
The estate tax exemption has been raised to $13.99 million per individual.
This gives small business owners more flexibility to transfer wealth or pass on their business without triggering hefty estate taxes.
There’s also a new savings tool: “Trump accounts,” which let parents invest up to $5,000 per year in a tax-free account for their children.
This provides an attractive option for business owners planning for the next generation.
However, the bill also eliminates the state and local tax (SALT) deduction for estates and trusts, which could increase the tax burden for some families.
To make the most of these changes, review your estate plan and gifting strategies with your tax professional.
The right moves now can help you minimize taxes, protect your legacy, and ensure your business thrives for years to come.
The Good: Tax Wins for Small Business Owners
1. QBI Deduction Made Permanent
The Qualified Business Income (QBI) deduction, originally introduced in the 2018 Tax Cuts and Jobs Act, is now permanent.
This 20% deduction applies to pass-through entities such as S-Corps, LLCs, and sole proprietors, which means huge potential savings for many small business owners.
Better yet, phase-out thresholds will now adjust for inflation.
2. 1099 Contractor Threshold Increased
Say goodbye to the $600 threshold for issuing 1099s.
Starting in 2025, you’ll only need to send a 1099 if you pay a contractor more than $2,000 annually (via check, cash, or direct bank transfer).
While this doesn’t change the contractor’s responsibility to report income, it does cut down on paperwork for business owners.
3. Depreciation and Asset Expensing Flexibility
If your business is equipment-heavy or involved in real estate, you’re in luck.
The bill introduces more generous depreciation and upfront expensing rules—great news for those investing in machinery, vehicles, or property improvements.
👉 Need help staying on top of what deductions apply to your business?
Download the Guide to Reducing Taxes for Business Owners and find real savings strategies.
The Good-ish: Useful Changes with Caveats
4. No Federal Income Tax on Tips (Kinda)
Workers in tipped industries will now enjoy a federal income tax exemption on the first $25,000 in tips.
But employers still need to pay payroll taxes, and this only applies to “customary tipping” industries.
Oh, and it expires in 2028.
5. No Federal Income Tax on Overtime (Sorta)
If you’re an hourly employee (not self-employed), you may not pay income tax on the first $12,500 in overtime pay.
However, Social Security and Medicare still apply.
Great for employees, but no direct benefit to small business owners.
6. Charitable Contribution and Tax Credits Changes
For non-itemizers, you can now deduct up to $2,000 ($1,000 for individuals) in charitable contributions.
But for those who itemize, the first 0.5% of AGI won’t count toward deductions, so high-dollar donors beware.
The Bad: Gaps & Temporary Gains
7. Temporary Relief for Everyday Americans: Child Tax Credit Expansion
Many benefits for average taxpayers and employees are short-lived.
Temporary relief will apply to the 2025 tax year and subsequent years until expiration (ending in 2028).
Corporations and high-income earners enjoy more permanent tax breaks.
8. Healthcare Cuts Could Ripple
Medicaid and food stamps budget cuts could affect access to healthcare and nutrition assistance. Notably in industries like dentistry and independent health clinics.
If you’re self-employed in healthcare, this could hit both your clients and your bottom line.
9. Immigration Enforcement & Labor Shortages
New funding for immigration enforcement may lead to workforce disruptions, particularly in sectors like hospitality, construction, and agriculture.
Even compliant employers may experience more audits and paperwork.
The Ugly: What to Watch Out For
10. Increased Scrutiny and Compliance Burdens
With changes to payroll, 1099s, and deductions, the IRS will likely be watching small businesses more closely.
Make sure your books, contracts, and documentation are audit-ready.
11. Uncertain Extensions
Provisions like the tip tax break, overtime exemption, and charitable deduction expansion are only in place through 2028.
Without future legislation, these perks will vanish.
So What Should You Do About It?
Now is the time to:
- Re-evaluate your business structure (LLC vs S-Corp)
- Forecast 2026 tax impacts
- Clean up contractor payments
- Talk to a CPA (hi 👋)
- Adjust charitable giving strategies
Stay updated on changes to the tax code to ensure compliance and maximize your benefits.
✅ Want a clean slate to work from?
Use Jamie’ s Get Your Biz Finances Organized toolkit to get systems in place and feel financially confident again.
And most importantly: stay informed.
🚀 Want to Ask Jamie Your Specific Questions?
Join the Next Power in Numbers LIVE
Feeling overwhelmed or unsure how the new law applies to your specific situation?
Join me for Power in Numbers LIVE at the end of the month on YouTube, where I’ll answer YOUR questions live!
📅 Submit your questions here: https://jamietrull.com/newsletter
Let’s break it all down, together.
Because you don’t need to be a tax expert to run a profitable business, you just need to stay plugged into the right people.
Youtube Transcript:
Note: Transcript taken directly from the video. It may include some typos, casual phrasing, and spoken-language quirks.
Good Bad and Ugly of the One Big Beautiful Bill for Business owners
I was wrong, and as someone that absolutely hates to admit when I’m wrong, it takes a lot to say that, but I was wrong about this one. Beautiful Bill. I really did not think there was any possible way that this was going to get passed and signed into law by the July 4th deadline that the Trump administration put on.
But it happened. So here we are. And now you’re probably wondering what this means for you, and there is so much noise out there. So I wanted to cut through the noise, actually get into the text of the bill and what it really says. And there is a lot of information that just is not correct floating around.
So I’m gonna go in. Jump into some of the highlights, specifically those things that are impactful to anyone who considers themself a entrepreneur, self-employed person, small business owner. I’m really gonna be focusing on it from that perspective because that is what I do here on this channel. So let’s break it down.
Hi, I’m Jamie — Your Small Biz Finance Guide and Profit Strategist
But before we jump into the good, the bad, and the ugly of this bill, I wanna introduce myself to those who don’t know me.
Hi, I’m Jamie Trull. I am a certified public accountant and a financial educator, and on this channel I love to bring the information to keep you informed, organized, and profitable in your small business.
So of course if you’re not yet subscribed, please make sure to hit that subscribe button.
Okay. So first and foremost, let’s talk about the fact that this is a bit of a mixed bag. There are a lot of things covered in here. It is not all good. It is not all bad. It is really a mixture.
So I wanted to look through some of the big provisions that are going to impact small business and really determine the good, the bad, and the ugly.
The Good News for Small Businesses in the Big Beautiful Bill Act
So let’s start out. With the good. There are some things in this bill that are going to be helpful for small business, specifically from a tax perspective.
So let’s jump into what those are.
The number one thing that I was hoping to see in this bill from a small business tax perspective was the qualified business income deduction, staying around and hopefully even becoming permanent.
And that’s exactly what happened. That was part of the 2018 Tax Cuts and Jobs Act, and it is a 20% deduction. For small businesses that are pass through entities. So that’s anyone who is self-employed files a Schedule C or is a small business, maybe an S corp, anyone who’s a pass through entity, not C corp.
Qualified Business Income Deduction Stays Thanks to the Cuts and Jobs Act
So these are true small businesses that the QBI deduction helps and it really has a sizable impact for small businesses.
So I was really worried that there was gonna be a tax cliff, that it was supposed to be expiring at the end of 2025. But thankfully that did stay in this final bill.
There was some discussion around what the total percentage was gonna be.
At one point, they were hoping to move it up from the current 20% to 23%.
That didn’t end up happening.
It is set at 20% for QBI and they also increased some of the phase outs. And those phase outs are now going to be subject to inflation adjustments in the future.
So I think this is great for specifically small businesses that are making under say, $500,000.
This is probably going to save you money, at least compared to what it would’ve been had QBI rolled off like it was Scheduled to at the end of this year.
So that is big.
That’s really gonna help you 2026 and going forward and hopefully reduce your tax bill. So let’s keep going with the good.
Higher 1099 Threshold Reduces Local Tax Headaches
The number two good thing that I see in this bill, and this one actually kind of flew under the radar a little bit, is that you’ll have fewer 1099s to send.
So remember that $600 limit where if you paid any kind of contractor over $600 in the year, you would have to send them a 1099.
Again, it depends on how you pay them.
And there are some rules around that. I’ve got content in this channel that dives into that.
However, that threshold is now no longer the $600 that it’s been forever, as long as I remember.
Uh, now it’s gone up to $2,000. So that means that you won’t necessarily have to be sending 1099s for every single contractor that you’re paying by cash or check.
And that is a benefit that is a good, I think, increase. I think 600 was just a little too low.
Especially given inflation and all of the things and where we’re at.
So I think this is actually a good one. It may not be like super overly impactful to too many business owners, um, but I think it is a good thing to know that the new limit for send 9, 10 90 nines to your contractors is now. $2,000. Now, if you are a contractor, that doesn’t mean that you don’t have to report those wages.
You still need to report all the income you earned regardless of whether you get a 1099 or not. So this probably won’t impact anything from a tax savings perspective for anyone.
I think it is a good change from an administrative perspective.
Expanded Depreciation Rules Boost Economic Growth
Now, the third good thing for small business owners is really something that’s a little bit of an accounting thing.
It relates to depreciation.
So if you’re a small business that has a lot of machinery and equipment, or maybe you’re in real estate, there’s a lot in here that’s actually pretty preferential for you and will allow you to actually.
Expense some of these purchases more upfront. So that was something that has been popular in the past.
That is something that is in this bill that this is one you definitely wanna talk to a CPA about and figure out how to use this appropriately.
But it does give some flexibility and probably will lead to some tax savings for those businesses that are heavy in assets.
New Tip Income Break and Inflation Reduction Act Limits
And now let’s move on to those provisions of this bill that I would consider good-ish.
That includes one that is talked about a ton and there’s a lot of misinformation about, and that is no tax on tips.
And the reason that I’m using my favorite air quotes when I say no tax, is that it isn’t quite what it may be sounds like.
Where I do think this will be good in some regards.
There are also some limitations that people need to know about. Specifically employers.
New Tip Income Break and Inflation Reduction Act Limits
So first and foremost, when we talk about no tax on tips, this is only for industries that are typical tipped industries.
So you can’t necessarily say, okay, I’m gonna start just receiving tips instead of my normal fees. Let’s say if you’re self-employed, uh, that’s not going to work.
It has to be an industry that tips are typical.
And the other thing that’s going to be important here is that it is only for federal income taxes.
So this does not get you out of having to pay payroll slash self-employment taxes, IE, social Security and Medicare.
That’s still gonna be required, so.
If you are someone who is self-employed, maybe you have a booth and you’re a stylist or something like that.
And you typically receive tips, the first $25,000 that you make in tips is going to essentially be federal income tax free.
However, you still will have that 15.3. Percent self-employment tax. That will be, uh, something you need to continue to pay.
And if you are an employer and you’re employing people in these tipped professions, you’re still gonna need to pay your half of those payroll taxes. So that 7.65% that you currently pay.
In Social Security and Medicare, unfortunately, you’re not going to get out of that. Now, this will help your employees because they will have less taxes to pay.
They’ll be paying less in income tax, but it doesn’t help you as their employer necessarily directly.
Maximum Deductions and Phase-Out Considerations
Now, like I said, the max is 25,000 that you could deduct.
You do not need to itemize.
This is an above the line deduction in addition to the standard deduction.
It does phase out after certain income limits. So if you make over $150,000, single or over $300,000 if you’re married filing jointly, this is going to start to phase out and you’re not gonna get the full impact.
Now, the other thing that I want to point out is this only goes through 2028, and this is also why I say it’s good-ish, because this is one thing that is gonna go away.
And it’s only gonna be here four years ending, uh, 20 26, 20 27, and 2028. So this starts next year and it’ll be in effect for three years unless they extend it.
Tip Income Myths: What the Internal Revenue Service Really Means by “Cash”
And the other thing I’ve seen some misinformation about is people saying that this only applies to cash tips. Meaning actual cash that you’re getting, and that’s not true.
While the IRS language does say it applies to cash tips, they mean anything that is of a monetary value directly.
So that could be cash, that could be credit card charges, debit card charges, anything like that is considered cash from an IRS perspective.
So that is going to fall under this. It doesn’t need to actually be bills that they’re handing you.
The only thing it doesn’t include is gonna be things like gifts.
If somebody hands you movie tickets, let’s say as your tip, then that’s not going to be excludable for this.
But I don’t know how many people are reporting that anyway.
The No-Tax Overtime Break, Helpful or Just Hype?
Now, moving on to another thing that I would put in the good-ish category is another one that’s been talked about a lot, which is no tax on overtime.
As you can guess, this doesn’t exclude you, from having to pay for payroll taxes, as well.
So you’re still going to have to pay payroll, taxes, social security, and Medicare.
It’s just no income taxes on the first $12,500 of overtime you earn.
Now, if you are a small business owner who is watching this or a self-employed individual: Unfortunately, you don’t qualify for overtime anyway.
so you won’t be able to take advantage of this. However, if you are employing people who are eligible for overtime, this will help reduce their taxes.
But unfortunately, it’s not really gonna do a whole heck of a lot directly from a tax perspective for you as the employer.
And this is another one of those things that expires in three years.
So at the end of 2028, this is going to phase out unless it is extended with other legislation.
New Charitable Contribution Rules: Good News for Standard Deduction Filers
Now the next thing I’ll quickly touch on, for those of you who do charitable contributions, this one’s kind of a good and a bad.
There are some changes to the charitable contribution rules and they’re gonna affect you differently depending on your situation.
So, uh, one thing that I think is actually a positive is the fact that you will now be able to write off, um, $1,000 if you’re single or up to $2,000 if you’re married of charitable con contributions to 5 0 1 c threes that qualify, even if you take the standard deduction.
So typically you’re only gonna be able to get a benefit for those charitable contributions.
You are itemizing your deductions, which not very many people do, because the standard deduction is so large now.
However, this changes that.
So the first one to $2,000, depending on your filing status, will be deductible.
So that’s the good, I actually think that’s a positive thing.
Some changes made during COVID did something similar for a lower amount and it worked pretty well.
I think that’s a positive for spurring people to give to charitable, uh, donations. However.
They also added in a provision for those that do itemize.
Let’s say you give a lot of charitable donations and you rely on that itemization.
Now you have to hit 0.5%, half a percentage of your total a GI in order to itemize. The first 0.5% is not essentially going to count.
So, depending on how much you make, that could mean the first, you know, couple thousand dollars even that you give away to charity wouldn’t be deductible. Only the amounts above that.
So that was an interesting thing that they added this floor for itemizes to be able to take advantage of this.
However, they did make it easier for those who don’t itemize to get some credit for some of their charitable donations.
Temporary Benefits vs. Permanent Perks — The Hidden Divide
Now, what do I consider the bad when we’re talking about this?
Well, I think one thing that’s been talked about a lot. And is fairly true is the fact that certain provisions that affect normal taxpayers are actually only temporary, right?
So your typical working person, it is only gonna be really getting temporary benefits. Versus higher net worth individuals and large corporations that are seeing more permanent benefits.
Now, again, QBI is a big one for small business, however. And that one has been made permanent. A really good thing.
But I do think it’s interesting with this bill, the fact that there are these cliffs for certain provisions.
But not for others.
So when we’re talking about the increase in estate tax thresholds, favorable capital gains rules, or some different corporate tax loopholes.
Those tend to be more permanent versus the things helping the everyday person. Which aren’t necessarily being made permanent.
At least at this time.
Medicaid Cuts and Healthcare Industry Impacts
Now this video is supposed to be about the good. The bad. And the ugly.
And so I do wanna bring up just a few things that I do not love in this bill, and that may have more of an indirect effect.
It may take a little bit of time to see what impact these are really going to have. But they could have significant impact even on small business.
And one of those things is the cuts to Medicaid.
So they have made changes to Medicaid that are fairly impactful and could mean that certain people lose access to healthcare and that is a concern.
So it’s gonna be interesting how this plays out in the real world.
However, you will be most directly impacted if you are in any kind of healthcare industry.
If you are a self-employed, let’s say, provider dentist office, medical provider, anything like that.
This could impact you if you work in a hospital setting or you rely on that.
This will hit healthcare first. So this is something to really be aware of. There’s a lot of ins and outs.
If you wanna get the bill, I’ve actually linked it down below so you can read more about what’s going on.
However, this is one thing that’s gonna take a little bit longer to see what the whole knock on effect is, but I do think it’s something that we need to be watching and be aware of and could be significantly impactful.
Immigration Enforcement Crackdown: What Small Business Owners Must Watch
The other thing that I would put in this same category that we just want to be watching to see.
How this is going to play out over time and how it impacts small business is the increase in budget that is going towards immigration enforcement.
And we’ve already seen a lot of small business owners, no matter who they employ.
Even when they’re employing people fully, legally there are more raids showing up at workplaces.
Especially if you are in a profession that hires a lot of immigrants.
If you’re in construction, restaurant work, farming, we’re seeing a lot of impact in those communities.
And like I said, even if you are right, hiring people. And doing things fully, legally.
There’s gonna be more of a crackdown.
You wanna make sure you don’t accidentally not do the paperwork that you’re supposed to do with your verification of, uh, their immigration status and things like that.
We’re gonna see more scrutiny on that type of thing.
So you wanna make sure you have all of your ducks in a row. And I think over the long term we could see the impact of potentially.
Less labor force, right?
So overall, even if you are employing legal people, if we’re taking a large portion of the labor force out, then there’s gonna be more competition for jobs.
More labor shortages, and that could impact all of us eventually.
And so that’s just something to be aware of and to watch that could also drive wages upwards.
Which you want to be able to then be planning for when you’re doing your business planning. So this is something again: People are gonna have various different ideas of whether this is good.
Whether this is bad.
Staying Informed and Proactive
However, ultimately I’m talking about specifically for small business.
This is something we need to be able to plan for and be watching.
So there you have it: that’s the good, the bad, and the ugly.
Now of course, this bill is over 800 pages long, so I have not talked about everything.
I tried to pick the things that were going to be most impactful in the short term and in the long term that small business owners need to be aware of.
However, if you’re so inclined and you want to spend some time reading it. I have linked the full bill.
So make sure to click that and you can actually go in and fact check yourself. I really recommend doing that.
There is so much misinformation and memes and things that are flying around the internet on all sides of the aisle. And it’s really important to fact check.
I cannot stress enough the importance of fact checking before you share something.
So thanks for being here. I really appreciate you guys.
Again, make sure to like and subscribe. If you want more of this content and you wanna make sure you don’t miss any big, uh, updates coming up, then make sure to hit that subscribe button and I’ll see you soon.
Bye for now.
