How the ‘Big, Beautiful Bill’ Impacts Small-Business Owners

The “big, beautiful bill" (BBB), passed on July 4, includes major tax provisions designed to ease financial strain on small businesses. But whether these changes will offset the pressures pertaining to tariffs and general economic uncertainty for small-business owners is up for debate.

“Some business owners genuinely feared having to shut down. That’s why the changes in the BBB are so important,” Dave Hanson, a tax partner at Aprio, a business advisory firm based in Atlanta, told NerdWallet via email.

Here, we break down the most important ramifications of the “big, beautiful bill” — from tax cuts to increasing the deficit — and offer expert advice on how small-business owners can prepare for the future.

Where the bill may benefit small-business owners

The bill contains several provisions that could ease some of the financial and operational challenges small businesses face, including:

Small business tax hike averted

The bill makes the qualified business income (QBI) deduction permanent. This deduction gives sole proprietorships, partnerships, S-corps and LLCs a tax break up to 20%.

The QBI deduction was set to expire at the end of the year, meaning millions of small-business owners would have faced a sudden tax increase in 2026.

Now that the deduction is permanent, small businesses are protected from higher tax bills and can better plan for their financial future.

Businesses can deduct research and development expenses immediately

If your business has U.S.-based research and development (R&D) expenses, the bill allows you to deduct them immediately on your tax return.

Currently, businesses are required to spread out the cost of their R&D expenses over five years, instead of writing them off all at once. This creates a major strain on cash flow that disproportionately affects small-business owners — who face hefty tax bills they weren’t expecting, said Hanson of Aprio.

Now, businesses can deduct these expenses in the year they occurred — plus, certain small-business owners can go back and update previous tax returns to claim R&D write-offs they weren’t allowed to take before.

“[This is] a game-changer, significantly improving cash flow into and enabling small businesses to invest more confidently in American talent and technology,” Hanson said.

Businesses can write-off 100% of the cost of eligible property

The bill allows small-business owners to immediately write-off 100% of the cost of new qualified property — such as equipment, vehicles and software — acquired after Jan. 19, 2025. This full, upfront tax break, known as bonus depreciation, had been phasing out since 2022, but the BBB makes it permanent.

Without the bill, small-business owners would have only been able to deduct 40% of the cost of eligible property in the current tax year. In other words, if you bought $50,000 of eligible equipment this year, you would have only been able to claim $20,000 of the $50,000. Now, you’ll be able to write-off the full $50,000 on your tax return — which makes it easier to invest in the tools you need to grow.

The bill also expands the Section 179 deduction. Like bonus depreciation, this deduction allows businesses to immediately write-off the full cost of certain assets, but it sets a maximum dollar limit. The bill raises the limit for this tax break from $1.25 million to $2.5 million — allowing small businesses to spend more (and still get a tax benefit) within a single year.

IRS reporting threshold raised for third-party apps

The bill helps simplify tax reporting for online sellers, gig workers and anyone else who uses third-party apps like Venmo or PayPal for business payments.

Before the BBB, third-party apps had to report over $600 in payments per year to the IRS. This rule caused confusion and unexpected tax paperwork among casual sellers and entrepreneurs who were just starting out.

Now, the bill has changed the reporting limits; third-party apps are only required to send Form 1099-K if you have over $20,000 in payments and over 200 transactions in a calendar year. Although you’re still required to report any business income you receive through these platforms on your taxes, this change reduces the reporting burden for both sellers and the IRS.

Where the bill may harm small-business owners

While these tax provisions and credits may offer some benefits, there are other parts of the bill that may not be as favorable for small businesses, such as:

Borrowing costs may rise

A higher national deficit often leads to higher interest rates, and it’s expected that the tax changes from the “big, beautiful bill” will add over $3 trillion to the federal deficit over the next 10 years.

“The bill will likely exacerbate inflation and increase borrowing costs at a time when small businesses need affordable capital to navigate tariffs and other economic challenges,” Heidi Pickman, vice president of engagement and external relations at CAMEO Network, a San Francisco-based entrepreneurs group, told NerdWallet via email.

For small-business owners who are already operating with limited finances, these higher borrowing costs could make it even more difficult to grow or expand.

Cuts to healthcare programs

The bill makes significant cuts to Medicaid and implements new, stricter eligibility requirements — meaning many small-business owners and their employees could lose access to healthcare coverage.

Additionally, the bill allows Affordable Care Act (ACA) Marketplace subsidies — which make healthcare more affordable for those who purchase plans through the marketplace —to expire at the end of the year. This change could substantially raise healthcare costs for small-business owners who rely on ACA health coverage.

These cuts put “pressure on already strained budgets and make it harder for small businesses to recruit and retain talent in a tight labor market,” Carolyn Rodz, co-founder and CEO of Hello Alice, an online small-business support platform, told NerdWallet.

Funding slashed for CFPB

The bill cuts the Consumer Financial Protection Bureau’s (CFPB) annual funding almost in half — meaning the agency will likely have to carry out the same responsibilities with significantly less money.

Although the CFPB is best known for its consumer protections, the agency also protects small businesses by increasing transparency and fair standards in the lending marketplace. The CFPB secures refunds and fines for predatory lending practices, as well as provides honest information to entrepreneurs.

“Weakening the CFPB leaves small-business owners vulnerable to predatory lenders and scams,” Pickman said.

How to prepare your small business for the future

Most of the changes won’t impact businesses immediately, but it’s a smart move to start planning now. “We always advise small-business owners to get scrappy, not scared," Rodz of Hello Alice told NerdWallet.

Follow these tips to put your business in the best situation for future success.

Work with a tax professional.

You won’t receive tax benefits from the bill automatically. You’ll need to know which tax breaks can impact your business the most and how to take advantage of them. To do this, several of the experts we talked to recommended working with a tax professional.

“Grab your accountant and run a ‘what-if’ on 2025 today,” said Dean Lyulkin, president and co-CEO of Cardiff, a fintech small-business funding company. “Plug in different scenarios — equipment purchases, R&D spends, leave wages, childcare subsidies — and see exactly how each tweak shifts your year-end tax bill. That quick exercise will turn vague legislative ‘wins’ into a plan that puts real dollars in your pocket.”

Reassess your healthcare strategy.

With ACA subsidies being rolled back, Rodz recommends that small businesses explore all options. Small-business owners should consider options like group plans, health reimbursement arrangements (HRAs) and community purchasing pools, she said, in order to maintain coverage for themselves and their teams.

» Find out more about small-business group health insurance plans

Get financing sooner rather than later.

With the potential for interest rates to rise, it may be advantageous to secure access to flexible funding now.

“This bill is not a free lunch. Higher deficits in coming years could keep interest rates higher for longer than you expect,” Lyulkin said.

He recommends being proactive — and securing fixed rate approvals for products like working capital loans and equipment financing now, before you think you might really need them.

It can also be a good idea to get a business line of credit and keep it in your back pocket for unexpected or emergency expenses. A business line of credit allows you to draw funds as needed — and only pay interest on what you borrow. Plus, once you’ve repaid what you’ve borrowed, you can continue to draw on the line.