In Brief: The One Big Beautiful Bill Act (OBBB) made historically low tax rates permanent and created time-sensitive opportunities for business owners through 2028. The most valuable changes include a permanent 20% business income deduction, higher estate tax exemptions, immediate equipment write-offs, and an extra $6,000-$12,000 deduction for business owners 65 and older. Strategic planning in the next few years is essential to maximize these benefits.
If you own a business, new tax legislation may impact your tax planning.
The One Big Beautiful Bill Act (OBBB), one of the most significant new tax laws of 2025, made some of the lowest tax rates in modern history permanent. It also created several time-sensitive opportunities that could significantly reduce your lifetime tax burden.
But these benefits don’t happen automatically. They require strategic tax planning in the next few years in order to take full advantage.
Here are five key opportunities for business owners to explore now:
1. Higher Estate Tax Exemptions Simplify Business Succession
The estate tax exemption jumped to $15 million per person ($30 million for married couples) and is now permanent.
For decades, business owners worried about heirs being forced to sell the family business just to pay estate taxes. This fear drove advanced planning strategies like irrevocable trusts, life insurance policies, and intricate legal structures that many business owners still maintain today.
But now, thanks to the OBBB, the need for some of these strategies is eliminated with such a large permanent exemption. In addition, for those with business values more than the exemption, we now have more confidence and clarity to execute advanced strategies to protect what has taken you a lifetime to accumulate. For businesses large and small, now is the time to focus on what matters: structuring succession for family harmony, operational continuity, and tax efficiency.
A comprehensive review from our team can reveal opportunities to reduce taxes and promote effective wealth transfer and business continuity.
2. Save Up to 20% on Your Business Income, Permanently
The 20% deduction for qualified business income (QBI) is now permanent. Previously scheduled to expire at the end of 2025, this deduction now offers long-term planning certainty.
If you operate as an S corporation, partnership, LLC, or sole proprietorship, you may deduct up to 20% of your qualified business income. On $500,000 in QBI, that’s a $100,000 deduction, potentially saving you $35,000 or more in federal taxes annually.
However, the rules are complex, but the planning opportunities are abundant. The first step is understanding whether your business is a SSTB (specified Service Trade or Business) or a non-STTB. For SSTB’s, the deduction starts phasing out at $444,600 taxable income (married filing jointly) or $222,300 (single filers). Above these thresholds, limitations kick in based on W-2 wages you pay or the value of your business property.
For specified service businesses like medical, legal, accounting, consulting, and financial services, the deduction can phase out completely at higher income levels.
Consider this example: Jay and Kelly, owners of a real estate development firm (not a SSTB) pay themselves combined W-2 wages of $150,000. By strategically increasing their W-2 compensation to $320,000, they can potentially generate approximately $46,000 in additional tax savings through a higher QBI deduction.
Now that this deduction is permanent, you can make long-term structural decisions with confidence. But maximizing benefits at higher income levels requires sophisticated planning around those phase-out rules, making it especially important to work with advisors who understand the nuances.
3. Get an Extra $12,000 Deduction If You’re 65+ (Through 2028)
If you’re 65 or older, you qualify for an additional $6,000 tax deduction per person ($12,000 for married couples) from 2025 through 2028. Benefits phase out above $75,000 (individual) or $150,000 (married filing jointly).
Many of our clients decide they want to continue to work past age 65 to keep their minds and bodies active. They take on consulting or board roles, or maybe continue to run a local business. Now through 2028, these seniors are now eligible for this additional bonus deduction, but we need to make strategic decisions on how we manager their modified adjusted gross income. It’s important to look at the timing of income and expenses to ensure we don’t earn over the income thresholds and miss out on this valuable deduction.
4. Lock In Today’s Low Tax Rates Before They Rise
One of the OBBB’s most significant changes is making the current historically low tax brackets permanent. The top federal rate is now permanently 37%, lower than the 39.6% rate before 2018, and dramatically lower than the 50-70% rates of past decades. But it isn’t just the top rate that is lower, it is the amount of income you can earn before you move to a higher bracket.
For example, in 2017 a married couple with taxable income of $450,000 would be in the 35% tax bracket. In 2026, that same $450,000 just start tipping into the 32% tax bracket.
This creates a rare opportunity: we know exactly what tax rates are today, but future rates are uncertain. With growing deficits and demographic pressures, many professionals believe rates could increase in the future. Converting traditional retirement accounts to Roth now locks in taxation at these known low rates permanently.
Many business owners have substantial balances in tax-deferred accounts like SEP IRAs, Solo 401(k)s, traditional IRAs. Eventually, Required Minimum Distributions will force you to pay taxes on this money, potentially at higher future rates.
You have a unique advantage as a business owner: fluctuating income. This creates conversion opportunities during down revenue years, the gap year after selling your business, or semi-retirement years when you control your taxable income.
Take this example: A business owner with $1.2 million in a SEP IRA sells her business at 63. By strategically converting portions to Roth during the three-year gap before Social Security begins, staying in the 22-24% brackets, she could potentially avoid over $200,000 in lifetime taxes compared to taking distributions later at higher rates during high-income RMD years.
The combination of permanent low rates and your income flexibility creates optimal conditions for Roth planning.
5. Write Off Equipment Purchases Immediately
100% bonus depreciation is now permanent for qualified property acquired after January 19, 2025. Previously phasing down to zero, you can now deduct the full cost of equipment and vehicles immediately rather than spreading depreciation over several years. This can accelerate tax deductions, slash current-year taxes, and improve cash flow.
Who could benefit most? Manufacturing companies buying equipment, service businesses replacing vehicle fleets, real estate investors using cost segregation strategies, and any business making significant capital expenditures, to name a few examples.
Here’s the impact: A manufacturing business planning $5 million in equipment purchases over three years could accelerate everything into 2025, deduct the full amount immediately, and save approximately $1.75 million in current-year taxes. That’s cash flow available for reinvestment rather than tied up in tax payments.
Why Professional Guidance Matters
These opportunities work together and can mean significant savings, but only with careful coordination.
For example: the timing of equipment purchases affects your QBI deduction. Roth conversions need to consider your exit timeline. Estate planning changes impact your insurance needs. Each decision creates ripple effects across your entire financial picture.
As advisors who specialize in business planning, we can help you capture the benefits while avoiding the pitfalls.
Let’s review your situation together and identify which opportunities make sense for you. [Find a Prosperity Capital Advisor near you] to get started.
Frequently Asked Questions about The One Big Beautiful Bill
What is the OBBB tax law?
The One Big Beautiful Bill Act (OBBB) is tax legislation signed in July 2025 that made historically low tax rates permanent and created time-sensitive deductions through 2028.
How does OBBB affect business owner taxes?
OBBB permanently extends the 20% qualified business income deduction for pass-through entities, raises estate tax exemptions to $15 million per person, and makes 100% bonus depreciation permanent. Some business owners 65+ also qualify for an additional $6,000-$12,000 deduction through 2028.
When do OBBB provisions expire?
Most OBBB provisions are permanent, including the 20% QBI deduction, low tax rates, and bonus depreciation. However, the senior deduction ($6,000-$12,000 for those 65+) expires December 31, 2028, creating urgency for older business owners planning exits.
Should I adjust my business structure because of OBBB?
It depends on your income level, business type, and goals. The permanent QBI deduction benefits S corporations, LLCs, and partnerships, but phase-out rules at higher income levels require calculated W-2 wage planning for professional services firms to maximize benefits. C-Corporations have lower tax rates and could also qualify for tax benefits such as Section 1202 Qualified Small Business Stock. It is important to analyze your goal of the business to determine the right structure. Are you building to sell or are you building to creating strong cash distributions to the partners? These are the foundational questions that drive entity structure selection.
How can business owners reduce taxes before 2028?
Potential opportunities include capturing the temporary senior deduction, accelerating equipment purchases for immediate write-offs, converting retirement accounts to Roth at today’s low rates, and reviewing estate plans to redirect costs from unnecessary insurance to productive investments.
Your Next Step: Schedule A Tax Strategy Review
The OBBB creates unprecedented opportunities for business owners, but many advantages are time-sensitive. The senior deduction expires in 2028. Equipment purchases require careful timing. Roth conversion windows narrow as income increases.
Schedule a comprehensive business owner tax strategy review with a Prosperity Capital Advisor near you. We’ll analyze your specific situation across all five areas of your wealth and develop a customized approach to maximize tax savings, optimize your business structure, and coordinate your exit planning.
Disclosure: Prosperity Capital Advisors prioritizes client interests with a comprehensive planning approach that integrates tax strategies with long-term wealth building. Our team specializes in working with business owners to navigate complex tax law changes while coordinating succession planning, retirement strategies, and holistic wealth management. See our full list of advisors by clicking [here].