The One Big Beautiful Bill (OBBB) introduces a number of substantial changes to the federal tax code, many of which take effect in 2025 and 2026. The bill permanently restores valuable deductions like 100% bonus depreciation and the Qualified Business Income Deduction (QBID), while also expanding Section 179 expensing and reinstating full R&D expensing. In addition, updated 1099 reporting thresholds aim to simplify compliance for small businesses. These changes could significantly impact your bottom line—here’s what you need to know.
The Qualified Business Income Deduction (QBID) has been made permanent and the phase out range will increase slightly. New to the QBID, beginning in 2026 - taxpayers with at least $1,000 of QBI will qualify for a minimum deduction of $400.
100% bonus depreciation is also restored permanently for property placed into service after January 19, 2025. This applies to MACRS property with a recovery period of 20 years or less.
Section 179 Expensing Expanded
Beginning in 2025, the Section 179 deduction limit increases to $2.5 million (up from the current $1.22 million), with the phase-out threshold rising to $4 million. These limits will now be indexed for inflation annually. This allows businesses to immediately expense more equipment, software, and qualifying property purchases.
Research & Development (R&D) Expensing
The OBBB reverses the TCJA provision requiring the amortization of R&D expenses. Starting in 2025, domestic R&D costs can once again be fully expensed in the year incurred, helping innovative businesses reclaim a vital cash flow advantage.
1099 reporting thresholds are changing:
Starting in 2026, the 1099-NEC and 1099-MISC thresholds will increase from $600 to $2,000, with inflation indexing starting in 2027.
The requirement to issue 1099-K reverts back to $20,000 in 2025. However, under the OBBB, a 1099-K will only need to be issued if the total payments exceed $20,000 AND the number of transactions exceed 200 within the calendar year.
Need Help Navigating These Changes?
Navigating the changes introduced by the One Big Beautiful Bill can be complex, and the implications for your business may vary based on your specific situation. If you have questions or need guidance on how to best position your business in light of these updates, don’t hesitate to reach out to our team. We’re here to help you understand the details, plan accordingly, and ensure you’re making the most of these new tax provisions. Contact us today to get started.
This material is presented solely for information purposes and has been gathered from sources believed to be reliable, however, Landing Point cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Nothing in this presentation is intended to serve as personalized investment, tax, or insurance advice, as such advice depends on your individual facts and circumstances. Advisory services are only offered to clients or prospective clients where Landing Point and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Landing Point unless a client service agreement is in place.