Planning with certainty is often difficult for small business owners, but the One Big Beautiful Bill Act (OBBBA) has been a turning point for many. On today’s episode of the U.S. Chamber of Commerce Small Business Update, Tom Sullivan, VP of Small Business Policy at the U.S. Chamber of Commerce, unpacks the tax benefits of the new bill and explains how to leverage them.
The U.S. Chamber of Commerce has spent nearly the last year pressing Congress to take action to prevent a tax hike. The organization’s efforts succeeded, leading to the passage of the OBBBA. Now, the Chamber is focusing on teaching small businesses how to free up capital to accelerate their business growth.
"What's truly amazing is the resilience of American entrepreneurs."
Firstly, Sullivan advises business owners to be proactive and discuss the new tax law with their tax advisors. If they wait until next year, they may miss out on valuable savings available right now.
Sullivan outlines two of the most immediate and impactful provisions of the OBBBA that business owners should be aware of.
Deduction limits have doubled
One key provision is double expensing. Under the new law, the deduction limit has doubled. This change is especially beneficial to manufacturing firms that previously had to amortize research and development expenses over a period of time.
These changes allow these business to amend their returns from the past three years to claim refunds. Importantly, many of these provisions, including the 20% deduction, are now permanent, providing small businesses with long-term certainty in their tax planning.
Overtime and tips are no longer taxed
Employees are a business’s most valuable asset. Under the new law, overtime and tips will no longer be taxed for eligible employees. This provision helps small firms attract talent, particularly for entry-level roles, and provides more stability when planning for growth.
One reason why some small businesses struggle with hiring is that they may lack the financial stability to retain employees for an extended period. Under OBBBA, business owners can more efficiently plan their tax obligations, making them more confident about adding staff.
Optimism hits an all-time high
These tax reforms are having a measurable impact. The MetLife & U.S. Chamber of Commerce Small Business Index recently hit an all-time high at 72, up from the Q2’s score of 65.2. In addition, the survey found that two in five small business owners believe the U.S. economy is in good health, while those who see it as in poor health declined 5 points to 42% year-over-year.
It’s a great time to start a business
Sullivan believes that now is a great time to launch a business, but for the first time, he added a caveat: it may not be the right time to start a business that relies on the U.S. government as its largest customer.
The U.S. Chamber of Commerce will continue promoting small business growth through events like its annual CO-100 Small Business Forum. The event, taking place on Wednesday, Oct. 8, in Washington, D.C., will celebrate the top 100 small businesses in the nation. Currently, in-person registration is fully booked; however, virtual registration is still available.
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