Prepare now for coming changes to your deductions, credits, and cash flow
Last week, the House passed a major tax bill called the “Make American Families and Workers Thrive Again Act.” While it’s not law yet, it’s packed with changes that could impact how small and mid-sized business owners handle taxes and make financial decisions.
Here’s a rundown of what matters most:
R&D getting easier
Since 2022, businesses have had to spread out (amortize) R&D expenses over 5 years instead of deducting them all at once. That rule hit cash flow hard.
What’s in the bill: Full, immediate R&D deductions would return for U.S.-based research from 2025–2029.
Why it matters: If your business invests in R&D, this could lower your tax bill and open the door to revisiting past filings.
Bigger deduction for pass-throughs
If your business is a sole proprietorship, partnership, or S corp, you likely use the Qualified Business Income (QBI) deduction.
What’s in the bill: Makes the QBI deduction permanent and bumps it from 20% to 23% starting in 2026.
Why it matters: A bigger deduction means less taxable income—and that’s good news for your bottom line.
Personal tax breaks
Since many business owners pay taxes as individuals, these updates matter:
- Current tax rates stay put. The lower individual tax rates from the 2017 tax law would no longer expire in 2025.
- Standard deduction increase extended. Plus, an extra bump from 2025–2028 ($1,500 for single filers, $1,000 for married filing separately).
- Child tax credit boost. Jumps from $2,000 to $2,500 per child temporarily (2025–2028), then adjusts with inflation.
Why it matters: These changes could lower your personal tax bill—and leave more cash in your pocket.
Boosted write-offs
Want to write off big purchases faster? This bill delivers.
- Bonus depreciation returns to 100% for qualified assets from 2025 through 2029.
- Section 179 limit rises from $1 million to $2.5 million (phase-out now starts at $4 million).
Why it matters: If you’re buying equipment or vehicles, these write-offs can offer serious savings.
1099 relief
Recent rule changes created confusion around third-party payments (think Venmo, PayPal, etc.).
What’s in the bill:
- Reverts the 1099-K reporting threshold back to $20,000 and 200+ transactions (instead of $600).
- Raises the general 1099-MISC reporting threshold from $600 to $2,000 (starting in 2026).
Why it matters: Less paperwork. Fewer surprise tax forms.
Employer credits
Two credits get upgraded:
- Employer-Provided Child Care Credit goes from 25% to 40% (or 50% for small businesses), and the cap rises to $500k/$600k.
- Paid Family and Medical Leave Credit becomes permanent and gets a refresh.
Why it matters: If you offer these benefits, the government might help cover the cost.
What to do now
This bill still needs to pass the Senate, so nothing’s final. But the direction is clear: lawmakers want to extend (and expand) a lot of popular tax breaks for businesses and families.
If you want to:
- Cut your future tax bills
- Plan purchases around these incentives
- Revisit past filings for missed opportunities
Now’s the time to talk strategy.
Arvo Advisors helps SMBs get clear on what these changes mean and how to prepare. Let’s talk.
