Key Takeaways

• The One Big Beautiful Bill Act (OBBBA) makes most Tax Cuts and Jobs Act (TCJA) provisions permanent, keeping lower brackets, a larger standard deduction, and full business expensing in place.
• Temporary deductions for overtime pay, tips, and auto loan interest are available through 2028, creating short-term opportunities for additional savings.
• Business owners should work with their CPA or tax advisor to review structure, investment timing, and estate strategies before year-end.

How Has the TCJA Changed Under the New Law?

The Tax Cuts and Jobs Act of 2017 significantly altered the tax landscape for individuals and businesses, but several of its key benefits were scheduled to expire at the end of this year. The One Big Beautiful Bill Act (OBBBA) changes that outcome by making most TCJA provisions permanent.

For business owners, this creates a more stable environment for planning income, investments, and entity structures. At the same time, the new law introduces short-term deductions and new limits, adding complexity as 2026 approaches.

Which TCJA Provisions Are Now Permanent?

The OBBBA retains many of the TCJA’s core provisions, providing long-term certainty for business owners.

• Tax brackets: The seven TCJA rates of 10, 12, 22, 24, 32, 35, and 37 percent remain in place.
• Standard deduction: The larger deduction continues, rising slightly in 2025 to $15,750 for single filers and $31,500 for joint filers.
• Alternative Minimum Tax (AMT): Higher exemption levels remain, reducing the number of affected taxpayers.
• Full business expensing: Companies can continue to deduct the full cost of short-lived assets and domestic research in the year they are purchased.
• Section 179 and business interest limits: These small-business-friendly provisions are now permanent.
• Qualified Business Income (QBI) deduction: The 20 percent deduction for pass-through income is a lasting part of the tax code.
• Estate and gift tax exemption: The exemption increases to $15 million per person beginning in 2026 and will adjust annually for inflation.

These permanent provisions enable more predictable financial planning and facilitate easier management of cash flow, investments, and succession strategies.

What New Deductions and Adjustments Should Business Owners Watch For?

While most TCJA provisions are now permanent, the OBBBA introduces new deductions that can reduce taxable income between now and 2028 and temporarily expands the state and local tax (SALT) deduction cap starting in 2025.

• Tip income deduction: Up to $25,000 of qualified tip income is deductible through 2028.
• Overtime pay deduction: Up to $12,500 for single filers or $25,000 for joint filers can be deducted for qualified overtime wages.
• Auto loan interest deduction: Up to $10,000 of interest on new vehicle loans for cars assembled in the United States can be deducted.
• Expanded senior deduction: Taxpayers aged 65 and older can claim up to $6,000 for singles or $12,000 for joint filers through 2028.
• SALT deduction cap: For tax years 2025 through 2029, the state and local tax deduction limit increases to $40,000 for most taxpayers who itemize, then returns to $10,000 beginning in 2030.

These short-term provisions offer valuable opportunities for reducing taxable income, but they also come with strict eligibility requirements. A CPA can help determine which apply to your situation and ensure accurate documentation.

How Can Business Owners Use These Updates to Boost Profitability?

With the TCJA framework now embedded into law, business owners can make informed, long-term decisions. Consider these steps before the year ends:

• Reevaluate your business structure. The permanent 20 percent QBI deduction keeps pass-through entities appealing, but comparing your effective tax rate to the 21 percent corporate rate can confirm the best fit.
• Maximize full expensing. Deducting the full cost of equipment and research spending can reduce taxable income while improving productivity.
• Use temporary deductions. Plan to capture benefits for tips, overtime pay, and auto loan interest through 2028.
• Update estate and succession plans. The $15 million exemption provides a clear foundation for ownership transfers and family wealth planning.
• Review itemized deductions. High-income taxpayers should assess whether itemizing remains advantageous under the new limits.

Because the new law combines both permanent and temporary provisions, working with your CPA or tax advisor can help you apply them effectively and optimize your after-tax results.

Why Should Business Owners Start Planning Now for the Years Ahead?

Even though many TCJA provisions are now permanent, Congress can still make changes in the future. Planning under the current law enables you to take advantage of what is available today while maintaining flexibility for potential adjustments later.

A year-end review with your CPA can help align cash flow, investment timing, and compensation strategies. Starting early gives your business time to adjust and ensures a smoother transition into the new tax year.

Frequently Asked Questions (FAQ’s)

• Will the TCJA’s lower tax brackets continue?
  The seven TCJA tax brackets are now permanent under the Tax Cuts and Jobs Act.
• Does the 20 percent pass-through deduction remain available?
  The Qualified Business Income deduction is a permanent part of the tax code for eligible entities.
• What is the new estate tax exemption?
  It increases to $15 million per person in 2026 and adjusts annually for inflation.
• How long will the new deductions for tips, overtime, and auto loan interest last?
  They remain available through 2028 unless Congress extends them.