New Tax Policy: Massive Business Wins

The One Big Beautiful Bill passed, and the business tax changes are massive. Forget the political theater about tips and overtime. I want to explain the business provisions that will change how you operate and invest. These are permanent policy wins that dwarf everything else in the bill.

The Big Three Game-Changers

1. Bonus Depreciation

This is the biggest business tax win in decades. 100% bonus depreciation is now permanent law, not some temporary incentive Congress can take away when they feel like it.

Here's what this means in practice: When you buy qualifying business equipment - machinery, computers, vehicles, furniture - you can deduct the entire cost in the year you purchase it instead of spreading the deduction over years.

Let's say you buy $100,000 worth of equipment. Under the old depreciation rules, you might deduct $20,000 per year for five years. With bonus depreciation, you deduct the full $100,000 right away. If you're in the 25% tax bracket, that's $25,000 in tax savings now instead of $5,000 per year for five years.

This is cash flow rocket fuel. Instead of waiting years to get your tax benefits, you get them when you need the money most - right after making a major investment.

I love this change because it removes uncertainty. Business owners can make long-term investment decisions knowing the tax treatment won't change based on whatever mood Congress is in next year.

2. Permanent 20% deduction

The pass-through deduction is made permanent at the current 20% rate. This affects millions of business owners: sole proprietors, partnerships, LLCs, and S-corporations. If you're organized as a pass-through entity (which most small businesses are), this was set to expire at the end of 2025.

Here's what this means: If you have $200,000 in qualified business income, the 20% deduction saves you $40,000 in taxable income. In the 24% tax bracket, that's $9,600 in tax savings per year that would have disappeared without this bill.

The permanent nature is crucial. Small business owners can now factor this deduction into long-term business planning without worrying about it disappearing. This kind of tax certainty is what businesses need to make major decisions about hiring, expansion, and investment.

3. Increased Section 179

The Section 179 deduction limits jump from $1.25 million to $2.5 million, with the phase-out threshold increasing from $3.13 million to $4 million.

Honestly, this matters less now that bonus depreciation is permanent at 100%. For most tangible business property, you can use bonus depreciation with no dollar limits instead of dealing with Section 179's caps. Section 179 is mainly relevant now for certain property types that don't qualify for bonus depreciation or specific situations where it might be advantageous.

The combination of permanent bonus depreciation and expanded Section 179 limits creates a powerful incentive for business investment. Instead of tax policy penalizing capital investment through slow depreciation schedules, it now rewards investment with tax benefits.

Estate Tax Relief for Family Businesses

The estate tax exemption jumps from about $13 million to $15 million per person and becomes permanent. For married couples, that's a $30 million exemption.

I think this is critical for family businesses, farms, and anyone who's built wealth through entrepreneurship. The estate tax forces families to sell productive assets just to pay taxes, which destroys jobs and breaks up enterprises.

Under the old system, families worried about the exemption dropping back to $5 million (which was scheduled to happen). Now they can plan succession with certainty. This lets family businesses focus on growing and creating jobs instead of expensive estate planning gymnastics.

Corporate Tax Rate Stability

The 21% corporate rate remains permanent. Some wanted it lower, but I think 21% strikes the right balance between competitiveness and revenue needs.

It provides certainty. Corporations can make long-term investment decisions knowing their tax rate won't fluctuate based on political winds. This stability is often more valuable than small rate changes.

Why These Changes Matter

Notice something: these business provisions are permanent, while the individual provisions like "no tax on tips" expire in 2028. That's not an accident.

The business tax changes recognize that real economic growth comes from business investment, job creation, and long-term capital formation. The temporary individual provisions are political messaging designed to expire after the next election.

I think this reflects a mature understanding of how tax policy drives economic growth. Businesses need predictable, long-term tax treatment to make major investment decisions. Temporary tax breaks don't move the needle because businesses plan beyond election cycles.

Energy Sector Changes

The bill phases out most clean energy tax credits from the Inflation Reduction Act while extending biofuel credits through 2031. Wind and solar credits end for projects starting construction after June 2026.

I think this reflects a shift toward energy independence through domestic production rather than subsidizing technologies. The market should determine the most efficient energy sources, not tax policy picking winners and losers.

The biofuel extension makes sense because it supports domestic agricultural production and reduces dependence on foreign oil. That's energy policy I can support.

The Fiscal Elephant in the Room

Now for the uncomfortable truth: this bill adds $3+ trillion to the deficit over 10 years while generating an estimated 1.2% GDP boost according to the Tax Foundation. That's brutal math - we're borrowing massive amounts for modest growth.

We already spend more on interest payments than our entire military budget. Every dollar we add to the deficit makes this fiscal nightmare worse, with current interest rates.

I love these business tax provisions. They're policy wins that will drive investment and economic growth. But we're borrowing from future taxpayers to fund current tax cuts.

The optimistic view is that business investment will generate enough economic growth to offset the revenue loss. The pessimistic view is that we're setting up a fiscal crisis while pretending tax cuts always pay for themselves.

My Take

These business tax changes represent the most pro-business policy in decades:

• Permanent bonus depreciation removes investment uncertainty
• Enhanced pass-through deduction puts real money in small business owners' pockets
• Expanded expensing limits improve cash flow for growing businesses
• Estate tax relief protects family enterprises

The permanent nature of these provisions is crucial. Businesses can plan long-term without worrying about Congress changing the rules every few years.

But I can't ignore the fiscal reality. We're borrowing trillions to fund these benefits while already drowning in debt service costs. The business tax changes will drive real economic activity, but the fiscal price is staggering.

For business owners, my advice is simple: take advantage of these provisions while they exist. Plan your equipment purchases, structure your business to maximize the pass-through deduction, and invest in growth.

Just don't expect this level of fiscal irresponsibility to be sustainable forever. Sometimes you stimulate growth to get out of fiscal problems. Sometimes you just dig the hole deeper. I think we're about to find out which one this is.