The Big Beautiful Bill Act: 7 Tax Changes Every $1M+ Business Owner Must Know (2025 Update)

If you're running a million-dollar business, the One Big Beautiful Bill Act (OBBBA) isn't just another piece of legislation you can ignore—it's a game-changer that could save or cost you tens of thousands in taxes this year alone. We've been diving deep into this sweeping tax reform, and honestly, the implications are staggering for high-income business owners.

The Act represents the most significant tax legislation since the Tax Cuts and Jobs Act, making several key provisions permanent while introducing new deductions that specifically benefit business owners in your income bracket. Let's break down the seven changes that matter most to your bottom line.

1. Permanent Tax Rate Structure: Your New Reality

The legislation permanently locks in the seven federal tax rates we've been working with: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For million-dollar business owners, this creates predictable planning opportunities we haven't had in years.

Here's what really matters to you: the jump from 24% to 32% occurs at $197,300 for single filers and $394,600 for married couples filing jointly. The top marginal rate of 37% kicks in at $626,350 for singles and $751,600 for married filing jointly.

Why this matters: You can now make long-term strategic decisions without worrying about these rates sunsetting. Our team has seen clients postpone major business moves due to tax uncertainty—that's no longer necessary.

2. The QBI Deduction is Now Permanent: A $160,000 Average Benefit

This is huge. The 20% Qualified Business Income deduction is now permanent, and if you're not maximizing this, you're leaving serious money on the table.

The numbers are staggering: nearly 74% of business owners earning $1 million or more claimed this deduction in 2022, reducing their taxable income by an average of $159,978. That's not a typo—we're talking about nearly $160,000 in tax savings for the average high-income business owner.

Who benefits: Owners of pass-through entities (sole proprietorships, partnerships, S corporations, and certain trusts) can deduct up to 20% of their qualified business income. If you're structured as a C corporation, we need to talk about potential restructuring opportunities.

3. Enhanced Standard Deduction Made Permanent

The nearly doubled standard deduction is now permanent: $15,750 for single filers, $23,625 for head of household, and $31,500 for married filing jointly in 2025.

While most million-dollar business owners itemize, this creates interesting planning opportunities. We've worked with clients who strategically time their deductions to alternate between itemizing and taking the standard deduction, maximizing benefits over multiple tax years.

4. SALT Cap Relief (With Limits)

The State and Local Tax deduction cap has been raised to $40,000 for taxpayers earning up to $500,000. This is double the previous $10,000 limit, but there's a catch—it phases out for higher earners.

Real talk: If you're earning well above $1 million, this won't help much. But if you're right around that threshold or have income that fluctuates year to year, strategic timing could help you capture this benefit. We've been helping clients structure bonus payments and other income to optimize their SALT deduction eligibility.

5. New Employee Benefit Deductions

The Act introduces several new deductions that savvy business owners can leverage:

• Qualified tip income deduction up to $25,000 (for tax years 2025-2028)

• Qualified overtime pay deduction for certain workers

• Auto loan interest deduction on certain vehicles

These might seem small compared to your overall tax picture, but they add up. If you have employees receiving tips or significant overtime, or if you're purchasing vehicles for business use, these deductions can provide meaningful savings.

6. Child Tax Credit Expansion

The expanded Child Tax Credit is now permanent. While this might seem irrelevant to business planning, we've found it impacts overall tax strategy for business owners with qualifying children.

Strategic consideration: This credit can influence decisions about income timing, year-end bonuses, and retirement contributions. When you're planning distributions or salary vs. dividend strategies, every credit matters in the overall calculation.

7. Energy Credits Eliminated

Starting in 2025, the Act repeals energy efficient credits for electric vehicles, hybrids, charging infrastructure, and energy efficient home improvements.

If you were planning to claim these credits for business vehicles or properties, those strategies need immediate adjustment. We're working with several clients to accelerate purchases into 2024 to capture these credits before they disappear.

What This Means for Your Tax Strategy

The permanent nature of these changes fundamentally alters tax planning for high-income business owners. For the first time in years, we can develop long-term strategies without the uncertainty of sunset provisions.

Key opportunities we're implementing for clients:

• Entity structure optimization: With permanent QBI benefits, pass-through structures become even more attractive

• Multi-year income planning: Permanent rates allow for sophisticated income timing strategies

• Retirement plan maximization: Stable deduction amounts enable better long-term retirement planning

Don't Navigate This Alone

These changes create both tremendous opportunities and potential pitfalls. The QBI deduction alone reduced taxable income nationwide by $216.1 billion in 2022—that's money business owners kept instead of sending to the IRS.

But here's the thing: the devil is in the details. QBI calculations involve complex rules around W-2 wages, depreciable property, and specified service businesses. The SALT cap phase-out creates planning opportunities that require careful income management. These aren't DIY territories.

Our team has been working through these changes with clients since the Act passed, and we're seeing significant tax savings for those who act strategically. If you're earning over $1 million and haven't reviewed your tax strategy in light of these changes, you're potentially leaving substantial savings on the table.

The combination of permanent lower rates and the QBI deduction creates the most favorable business income tax environment we've seen in decades. But only if you structure and plan correctly.

Ready to maximize your tax savings under the new law? We're here to help you navigate these changes and develop a strategy that takes full advantage of every opportunity. Contact our team to schedule your strategic tax planning consultation.

These changes are permanent, but the planning window for 2025 is closing fast. Let's make sure you're positioned to benefit from every dollar of tax savings available under the Big Beautiful Bill Act.