The short answer: Congress passed the One Big Beautiful Act (formerly the One Big Beautiful Bill), making sweeping changes to the tax code. Nine of those changes will directly affect what you owe — from tax-free tips for service workers to a permanent 100% bonus depreciation for businesses to a $40,000 SALT deduction cap for California and New York residents. Here's what changed and what it means for you.
9 tax changes explained by a former IRS auditor who actually read the bill. Watch on YouTube →
The Tax Cuts and Jobs Act of 2017 created a temporary set of tax cuts that were always set to expire. The One Big Beautiful Act makes them permanent. The most impactful for small business owners is the 20% Qualified Business Income (QBI) deduction.
If you own an LLC, S-Corp, sole proprietorship, or run a side hustle, you may be able to deduct 20% of your qualified business income from your taxes. On $100,000 of business income, that's $20,000 off the top before you calculate your tax bill.
⚠ Important limitation: If you're in a "specified service trade or business" — that includes lawyers, doctors, financial advisors, accountants, and consultants — the QBI deduction phases out at higher income levels. Check with your CPA before assuming you qualify.
If you live in a high-tax state — California, New York, New Jersey, Maryland, Virginia — this change is significant. Before the One Big Beautiful Act, you could only deduct up to $10,000 of state and local taxes (income tax + property tax combined) on your federal return.
That $10,000 cap was a major reason people moved from California and New York to Nevada and Texas after 2017. Now the cap is $40,000. If you pay $35,000 a year in California state income tax plus property taxes, you now get the full deduction. Previously, $25,000 of that was just gone.
ⓘ The SALT deduction is an itemized deduction. It only helps you if your total itemized deductions exceed your standard deduction. Homeowners in high-tax states with mortgages are most likely to benefit.
For a detailed breakdown, see our full page on the SALT deduction increase.
This was one of the most-talked-about campaign promises and it made it into the bill. See our full guide at Tax-Free Tips and Overtime Explained for the full breakdown. The short version:
The old $600 threshold for issuing 1099s was widely considered one of the most burdensome rules for small businesses and freelancers. Pay a contractor more than $600 and you had to collect their Social Security number and file a form. Now that threshold is $2,000 — significantly reducing the administrative burden for small businesses.
Payment apps (Venmo, Cash App, PayPal): the threshold for receiving a 1099-K from these platforms is $20,000. Unless you're running a significant business through these apps, you likely won't receive a form.
Two of the most impactful changes for business owners and startups are permanent 100% bonus depreciation and the restoration of full R&D deductibility.
See our dedicated pages for full details: 100% Bonus Depreciation Explained and R&D Expense Deduction Restored.
The Qualified Small Business Stock (QSBS) exclusion lets startup founders, early employees, and angel investors exclude a portion of their stock gains from federal tax entirely when they sell. See our full breakdown at QSBS Exclusion Changes Explained.
Romeo has read the bill. He knows which provisions apply to your situation and which don't — and he'll tell you the truth about what the limitations are, not just the highlights.
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