{"id":32647,"date":"2025-09-24T12:24:59","date_gmt":"2025-09-24T16:24:59","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=32647"},"modified":"2025-09-26T13:37:24","modified_gmt":"2025-09-26T17:37:24","slug":"small-business-owners-obbba","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/small-business-owners-obbba\/","title":{"rendered":"Small business owners: Here\u2019s what you need to know about OBBBA\u00a0"},"content":{"rendered":"
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\n\t\t\t\t\t\tSmall business owners: Here\u2019s what you need to know about OBBBA\u00a0\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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The One Big Beautiful Bill Act (OBBBA) of 2025<\/strong>, signed into law on July 4, 2025<\/strong>, as Public Law No: 119-21<\/strong>, is a sweeping tax reform<\/a> aimed at simplifying the tax code and stimulating business growth. It introduces new deductions and reporting changes that can benefit small business owners, if you understand how to apply them. <\/p>\n\n\n\n

Many of the bill\u2019s provisions are designed to help small businesses invest in growth, reduce administrative burdens, and support their workforce. Whether you’re upgrading equipment, managing seasonal labor, or offering childcare benefits, these changes can improve your bottom line.<\/p>\n\n\n\n

Here\u2019s what OBBBA means for your business. Plus, learn how <\/strong>Sage 50, a powerful desktop accounting software with secure cloud hosting,<\/strong><\/a> helps you manage these changes with confidence.<\/strong><\/p>\n\n\n\n

Section 179 deduction for equipment<\/strong><\/h2>\n\n\n\n

Small businesses can now deduct up to $2,500,000<\/strong> in qualifying equipment purchases (including, but not limited to, computers, tools, and machinery) immediately, rather than depreciating them over several years. The deduction begins to phase out when total equipment purchases exceed $4<\/strong>,000,000.<\/strong><\/a>  <\/strong>This means businesses purchasing more than this amount will see a reduced deduction.<\/p>\n\n\n\n

Advice: <\/strong>Consider timing your equipment purchases strategically, as buying before year-end can maximize your deduction for the current tax year.<\/p>\n\n\n\n

Sage 50 Tip: <\/strong>Use Sage 50\u2019s budgeting tools<\/a> to forecast how equipment investments will impact your cash flow and tax liability.<\/p>\n\n\n\n

Bonus depreciation<\/strong><\/h2>\n\n\n\n

Businesses can write off\u00a0100%<\/strong>\u00a0of the cost of eligible property<\/a>\u2014such as vehicles, software, or office upgrades\u2014in the year it\u2019s purchased and placed into service.\u00a0See IRS Publication 946 for the full phase-down schedule.<\/strong><\/a><\/p>\n\n\n\n

Advice:<\/strong> Bonus depreciation is especially useful for upgrading tech or vehicles. Pair this with Section 179 for maximum impact.<\/a><\/p>\n\n\n\n

Sage 50 Tip:<\/strong> Create and flag bonus depreciation journal entries, ensuring accurate records and smoother collaboration with your accountant.<\/p>\n\n\n\n

Overtime pay deduction<\/strong><\/h2>\n\n\n\n

Employees may deduct up to $12,500<\/strong> in qualified overtime wages on their personal federal tax returns. This applies to the portion of overtime pay that exceeds the regular rate (the \u201chalf\u201d in \u201ctime-and-a-half\u201d<\/em>).<\/a><\/p>\n\n\n\n

Advice:<\/strong> Educate your employees about this deduction, as it could improve morale and retention.<\/p>\n\n\n\n

Sage 50 Tip:<\/strong> Generate custom pay codes to track overtime wages, simplifying reporting and helping employees claim their full deduction.<\/p>\n\n\n\n

Cash Tip Deduction<\/strong><\/h2>\n\n\n\n

Employees in tip-based occupations may deduct up to $25,000<\/strong> in qualified tips<\/a>, provided they are reported on a W-2, 1099, or Form 4137. This especially benefits service industries like restaurants, salons, and hospitality.<\/p>\n\n\n\n

Advice:<\/strong> Encourage accurate tip reporting by offering digital tip tracking or payroll integration.<\/p>\n\n\n\n

Sage 50 Tip:<\/strong> Use Sage 50 to track cash tips separately from regular wages to stay compliant with IRS reporting requirements and support employees in maximizing their deduction.<\/p>\n\n\n\n

Contractor Reporting Threshold<\/strong><\/h2>\n\n\n\n

The threshold for issuing 1099s to contractors remains at $600 in 2025, as confirmed by the\u00a0IRS Instructions for Forms 1099-NEC<\/a>\u00a0. In 2026, the bill will raise the reporting threshold to $2,000 and will be indexed for inflation every year afterwards. The IRS continues to review reporting requirements for future years, so small businesses should monitor legislative updates and be prepared to adjust their contractor tracking processes if the threshold increases in coming years.<\/p>\n\n\n\n

Advice:<\/strong> Even though the threshold hasn\u2019t changed for 2025, review your contractor list on a quarterly basis to avoid last-minute 1099 surprises.<\/p>\n\n\n\n

Sage 50 Tip: <\/strong>Generate accurate contractor reports<\/a> at the $600 threshold and be ready to adjust if future legislation changes the rules.<\/p>\n\n\n\n

Employer Childcare Credit<\/strong><\/h2>\n\n\n\n

Employers may claim up to\u00a0$500,000<\/strong>\u00a0in tax credits for providing or subsidizing childcare. Beginning January 1, 2026, the credit covers 40% of facility costs<\/strong> and 10% of resource and referral services<\/strong><\/a>.<\/p>\n\n\n\n

Advice:<\/strong> Consider partnering with local childcare providers to offer benefits without building a facility.<\/p>\n\n\n\n

Sage 50 Tip:<\/strong> Use Sage 50 to create a dedicated GL account for childcare-related expenses and track them automatically, making it simple to calculate credits at tax time.<\/p>\n\n\n\n

What to Ask Your Accountant<\/strong><\/h2>\n\n\n\n

Understanding how OBBBA applies to your business isn\u2019t just about knowing what\u2019s changed: it\u2019s about knowing how to act on it.<\/strong> Every small business is different, and the impact of these new deductions and credits will depend on your structure, industry, and financial strategy.<\/p>\n\n\n\n

Before making decisions, use this list to guide a conversation with your accountant or tax advisor. These questions can help you uncover opportunities, avoid compliance pitfalls, and make the most of the reforms:<\/p>\n\n\n\n