2025 Tax Bill Update: What Small Business Owners Need to Know (July Update)
Neil Langlois | Business Taxes, CPA and Accounting Industry, Individual Taxes, Real Estate
Originally published March 2025 | Updated July 2025
Congress continues to advance a sweeping tax bill aimed at extending—and in some cases expanding—key provisions from the 2017 Tax Cuts and Jobs Act (TCJA). While the political debate continues, here’s what actually matters for small business owners—especially if you operate as an S-corp, partnership, or sole proprietor.
Key Provisions That Affect Small Business Owners
✅ QBI Deduction Gets a Boost (and Becomes Permanent)
The Qualified Business Income (QBI) deduction would increase from 20% to 23% and become permanent under the proposed legislation. This is a huge shift for pass-through businesses that have been planning around a 2026 phaseout. Permanence means we can now build long-term tax strategies without second-guessing when the deduction might disappear.
✅ 100% Bonus Depreciation Returns
Bonus depreciation has been phasing down (we’re at 60% for assets placed in service this year), but this bill would bring back 100% bonus depreciation for qualifying property placed in service between January 19, 2025, and the end of 2029. That opens the door for accelerated write-offs on equipment, leasehold improvements, and other capital expenditures.
✅ Higher Section 179 Expensing Limits
Section 179 expensing limits would rise to $2.5 million, with a phaseout beginning at $4 million. This enhances flexibility to fully expense assets like vehicles, software, and machinery—especially useful for businesses that regularly invest in infrastructure.
✅ Interest Deduction Relief
Section 163(j) would return to EBITDA-based limitations instead of the stricter EBIT calculation used under recent law. This would make more interest expense deductible, a welcome change for businesses using debt to fund growth or real estate expansion.
✅ R&D Expensing Restored (Section 174 Fix)
Since 2022, businesses have been forced to capitalize and amortize domestic R&D costs over five years (15 for foreign). The new bill would reverse that, restoring full expensing of U.S.-based R&D starting in 2025. This is a game-changer for startups, tech companies, and any business investing in process improvement or internal tooling.
✅ Software Development Costs: Expense Instead of Amortize
Tied to the R&D fix, the bill also allows domestic software development costs to be fully expensed in the year incurred. No more five-year amortization for building internal platforms, apps, or client-facing systems—this puts developers and tech-forward businesses back on better tax footing.
Strategic Takeaways for Business Owners
- More Upfront Deductions
The combination of 100% bonus depreciation, increased Section 179, and restored R&D expensing makes 2025 a powerful year for reducing taxable income. If you’re eyeing CapEx, internal systems, or process automation, timing matters. - Certainty in Long-Term Planning
A permanent QBI deduction gives us the green light to optimize your compensation and entity structure without wondering what will expire in 2026. - Debt-Financed Growth Gets Easier
With interest deductibility based on EBITDA again, borrowing for expansion becomes more tax-efficient. - R&D Credits and Software Deductions Back in Play
If you’ve been holding off on R&D claims or software write-offs due to Section 174 limitations, it’s time to reevaluate. The new rules simplify your path to strategic tax savings.
What’s Next?
As of July 2025, the bill has cleared the House Ways and Means Committee and may advance later this year as part of a broader budget reconciliation package. It’s not law yet, but it’s close enough that proactive planning now could give you a major edge.
From My Desk at Wm. Neil Langlois, CPA
These aren’t abstract code tweaks. They affect how you invest in your business, when you purchase equipment, and how you structure ownership across entities. If you’re a client, we’ll start modeling these scenarios ahead of fall. If you’re still just filing returns without a strategy-first mindset, now’s the time to change that.
Tax returns are the result.
Tax planning is the job.
If you want to break this down for your business—whether it’s optimizing deductions, forecasting cash flow, or restructuring for 2025 and beyond—reach out. As always, we’ll make it clear, strategic, and focused on your bottom line.
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Wm. Neil Langlois, CPA
Exceptional, tailored service for your accounting and tax prep needs.
neil.tax | info@neil.tax | (541) 240-2933
