The One Big Beautiful Bill – What It Means for Businesses

By Christopher Pace, President

President Trump’s H.R. 1 — the One Big Beautiful Bill Act — isn’t just about personal tax relief. It includes major changes for businesses, large and small. From depreciation rules to 1099 filing thresholds, here’s a full rundown of what business owners need to know.

Couple Examining their Finances Online

1099-MISC and 1099-NEC Threshold Changes

Starting in tax year 2026, the reporting threshold for 1099-MISC and 1099-NEC forms will increase from $600 to $2,000. This is a significant change that will reduce filing burdens for small businesses and independent contractors. Beginning in 2027, the threshold will be adjusted annually for inflation.

Qualified Business Income (QBI) Enhancements

The bill expands the phase-in range for QBI deduction limitations related to W-2 wages and qualified property. For single filers, the phase-in range increases from $50,000 to $75,000.

For joint filers, it increases from $100,000 to $150,000. This adjustment allows more taxpayers to claim the full 20% QBI deduction before hitting income-based restrictions.

For those above the phase-in threshold, eligibility for the full deduction still depends on wages paid or qualified property held by the business. In addition, the bill introduces a new minimum QBI deduction of $400 for eligible taxpayers. To qualify, you must have at least $1,000 in qualified business income from an active business in which you materially participate. Beginning in 2027, both the $400 minimum deduction and the $1,000 income floor will be adjusted annually for inflation and rounded to the nearest $5.

Business Green Energy Tax Credits — Repealed

Several clean energy incentives previously available to businesses are now scheduled to sunset. These include deductions and credits for renewable energy investments, energy-efficient upgrades, fleet electrification, and clean energy manufacturing.

Key deadlines include:

• Clean Vehicle Credit: Expires after September 30, 2025

• Accelerated depreciation for energy properties: Ends December 31, 2024

If your business is considering energy-efficient upgrades or EV purchases, you may want to act quickly before these incentives disappear.

Bonus Depreciation Made Permanent

Previously, bonus depreciation was set to phase out. Under the new law, 100% bonus depreciation is now permanent for property acquired on or after January 19, 2025. This allows businesses to immediately expense the entire cost of qualifying property placed in service after that date.

However, property acquired before January 19, 2025, remains subject to the previous rules, meaning only 40% bonus depreciation is allowed. Note that you cannot amend prior-year returns to retroactively apply the new 100% depreciation rule. To qualify, both the placed-in-service date and the contract date must fall on or after January 19, 2025.

Section 179 Expands

Section 179’s maximum deduction increases from $1 million to $2.5 million. The phaseout threshold for eligible property increases from $4 million to $6.5 million. This gives businesses more room to expense capital investments in full during the current tax year.

Bonus Depreciation vs. Section 179 Losses

An important distinction remains: Bonus depreciation can create a business loss, while Section 179 cannot. This affects how aggressive your depreciation strategy can be, depending on your business’s profitability and tax planning goals.

Charitable Contribution Changes for C-Corporations

Beginning January 1, 2026, C-Corporations will face a new floor for charitable contribution deductions. Contributions must now exceed 1% of taxable income to be deductible. This means the first 1% of charitable donations will yield no tax benefit; only amounts above that threshold are deductible, subject to the existing 10% cap on total contributions.

Research & Development Credit (R&D)

Under new §174A, businesses may immediately deduct qualified domestic research and experimental (R&E) expenses. This provision overrides §263, which typically requires capitalization of such expenses. However, foreign R&E expenses must still be capitalized and amortized over 15 years. This incentivizes domestic R&D while discouraging offshoring.

1099-K and the Repeal of the De Minimis Rule

Previously, platforms like PayPal and Venmo were required to issue Form 1099-K for any business payments totaling over $600. That’s been rolled back. Beginning in 2026, the threshold reverts to the original $20,000 and 200-transaction rule.

That said, you are still required to report all income, even if you don’t receive a 1099-K. This change affects whether third-party networks must issue the form — not whether you owe taxes.

Qualified Small Business Stock (QSBS) Gain Exclusion Updates

The legislation introduces new incentives for long-term investors holding Qualified Small Business Stock (QSBS). The updated rules provide tiered capital gain exclusions based on holding period for stock acquired after the bill’s enactment date:

• 50% exclusion after 3 years

• 75% exclusion after 4 years

• 100% exclusion after 5 years

For QSBS acquired before the law’s effective date, the previous five-year, 50% exclusion rule still applies — unless a higher exclusion rate is allowed under special provisions. This change is designed to promote long-term investment in small business equity.

If you have questions about how any of these provisions apply to your business — especially with regard to capital purchases, depreciation, or charitable giving strategy — we’re happy to help and offer paid consultations. Email or call the office to schedule.

Have Questions? We’re Here to Help.

These changes are sweeping, and not all of them will affect every business. We’re offering paid consultations to help you understand how this new law impacts your specific tax situation.

If your business has a flat-rate full-service contract with Pace Accounting, consulting is included in your package. Just reach out to schedule a time to chat.