The One Big Beautiful Bill (H.R. 1, Public Law 119-21), signed into law on July 4, 2025, includes several tax provisions that could benefit individuals considering buying a small business or franchise. For business buyers thinking about making a move this year, there are clear reasons to act sooner rather than later.
Below, we’ll highlight key provisions in the law that could improve after-tax cash flow, enhance financing opportunities and affect how you structure your business.
A Bigger Deduction for Pass-Through Income
The bill permanently increases the Qualified Business Income (QBI) deduction for pass-through entities to 23%. This means that business owners operating as S-corporations, partnerships or LLCs can deduct a larger portion of their income when calculating taxable income.
For buyers of existing small businesses and franchises that operate in a pass-through structure, this larger deduction can improve after-tax earnings. Better cash flow from day one can help owners reinvest in growth or service debt more easily.
If you are evaluating different legal structures for your next acquisition, be sure to check out The Process of Buying a Business.
Higher SALT Deduction Limit (For Now)
The bill temporarily raises the cap on the State and Local Tax (SALT) deduction to $40,000 per year from 2025 through 2029. This change can provide significant relief to buyers in states with higher property or income taxes.
For buyers looking at opportunities in high-tax areas, this expanded deduction may tip the scales in favor of purchasing sooner. However, it is important to note that after 2029, the SALT deduction cap reverts back to $10,000, so this window is temporary.
Section 179 Expensing and Bonus Depreciation Extended
The bill increases the Section 179 expensing limit to $2.5 million, with a phase-out threshold at $4 million. In addition, 100% bonus depreciation is extended for qualified property placed in service after January 20, 2025.
This means that a new owner who invests in equipment, technology or leasehold improvements can deduct the full cost immediately. This is an important tax benefit that can reduce taxable income and improve cash flow early in ownership.
For help structuring acquisition expenses and avoiding surprises, check out Divisions to Consider in Closing Papers.
Enhanced QSBS Benefits (For C Corporations)
If you are structuring your acquisition as a C corporation, the bill makes an important change to the Qualified Small Business Stock (QSBS) rules. The asset threshold to qualify for QSBS treatment increases to $75 million, and owners can exclude 50% of capital gains after three years, 75% after four years, and 100% after five years of holding qualified stock.
This provision could make a C corporation structure more appealing to buyers planning a future sale or exit strategy.
Timing and Planning Matter
The combined impact of these provisions makes 2025 a uniquely attractive time for small business and franchise buyers:
- The expanded SALT deduction and permanent QBI deduction boost after-tax earnings.
- Immediate expensing under Section 179 and 100% bonus depreciation help offset startup costs.
- QSBS enhancements reward longer-term exit planning.
Some provisions, such as the SALT deduction increase, are temporary. Timing your purchase and planning your structure carefully can make a significant difference.
If you are preparing to buy, explore Reading Between the Lines: How to Analyze a Business for Sale for deeper analysis techniques.
Next Steps in Buying Your Business
Do you need help evaluating a business or franchise opportunity? It can be complicated, and a local Business Broker can assist you. Use our directory to find a Business Broker near you, or contact us for personalized assistance.
By understanding these new tax provisions and seeking expert guidance, you can acquire a business with greater confidence and set the foundation for long-term success. Ready to see what’s out there? Browse businesses for sale in your area and take the first step toward owning your future.
