The OBBB Act – What YOU Need to Know

Joshua Paul Friedlander |
Categories
Tax

Is it Big? Is it Beautiful? Well, it’s definitely an Act—and a major one at that.

By now, you’ve likely heard about the One Big Beautiful Bill (OBBB) Act, signed into law on July 4th, 2025. While this approximately 870 page piece of legislation was passed only weeks ago and still being interpreted and digested by all, there is plenty to take a look at.

If you own a business—especially in the construction world—you know how much local, state, and national policies can affect your bottom line. The OBBB Act brings big changes that could mean real tax changes for you, your company, and your key employees.

We highly recommend reviewing these changes with your CPA or tax team. Below are some of the top considerations to keep in mind as we head into the final stretch of 2025.

Also, make sure to read to the end for the Summary & Bonus Section on how to tie this all together.

1. 2017 Tax Cuts & QBI Deduction Made “Permanent”

  • The 2017 Federal tax brackets (10% to 37%) are now permanent.
  • The 20% Qualified Business Income (QBI) deduction stays in place for pass-through businesses like LLCs, S-corps, and partnerships.
  • Income limits to qualify for some other deductions have varying phaseouts: $75,000 for individuals and $150,000 for couples.

Why it matters: Most construction companies are pass-through entities. These changes could lower taxes for owners and high-earning employees.

Is it really permanent? Well… it is, until it’s not. A future administration could make changes to this or any part of this Bill.

2. 100% Bonus Depreciation & Section 179 Expensing

  • Businesses can now fully deduct qualified purchases (like equipment or vehicles) in the same year.
  • The Section 179 expensing cap doubled to $2.5 million.
  • 100% bonus depreciation is back through 2025–2026.

Why it matters: If you're buying equipment or vehicles, you can take this deduction now instead of spreading it out over several years—caution should be taken if these assets are to be disposed of in the future or if anticipated future growth or earnings could warrant a different strategy.

3. SALT Deduction Gets a Boost (For Now)

  • The State and Local Tax (SALT) deduction cap jumps from $10,000 to $40,000 from 2025 to 2029.
  • It phases out for incomes over $500K and drops back to $10K in 2030 (unless extended).

Why it matters: Business owners in Charleston with high property or state tax bills may now be able to deduct a lot more.

4. Qualified Small Business (QSB) Stock – Big Tax Break for Future Sales

  • Under Section 1202, gains from selling Qualified Small Business Stock (QSBS) may be 100% tax-free—if the stock is held for at least 5 years.
  • The OBBB Act raises the eligible gain exclusion from $10 million to $15 million per taxpayer, starting in 2025.
  • Applies only to C-corporations with assets under $50 million at the time of stock issuance.
  • S-corporations that convert to C-corps may become eligible—but only if they issue new QSBS under the right structure for bona-fide business reasons.

Why it matters: If you’re thinking about selling your business, this could save significant taxes. But it requires careful planning—talk to your CPA or legal team before making any changes.

5. New Tax Deductions for Employees: Tips, Overtime & Vehicle Loans

  • Tips deduction: Up to $25,000/year tax-free for tipped workers (2025–2028).
  • Overtime pay deduction: Up to $12,500 (single) or $25,000 (married) for qualifying overtime.
  • Auto loan interest deduction: Up to $10,000 for U.S.-made cars, with income limits.

Why it matters: Key employees in trades, sales, or hospitality could qualify. Business owners should stay up to date on reporting requirements and help their teams understand the benefits especially if their employees are overtime eligible.

6. Increased Standard & Senior Deductions

  • The standard deduction goes up—for example, $31,500 for joint filers in 2025.
  • Seniors age 65+ can claim an extra $6,000 deduction, phased out for higher incomes.

Why it matters: Great news for older business owners and senior team members nearing retirement.

7. Estate, Gift, and AMT Thresholds Raised

  • Estate and gift tax exemption is now $15 million, permanently.
  • Annual Gifting: $19,000 per year, per recipient, without triggering gift taxes- this can be cash, or other assets such as real estate and business interest.
  • The Alternative Minimum Tax (AMT) has higher exemption amounts and phase-outs.

Why it matters: If you're planning to pass your business or wealth to the next generation, this creates more certainty and better options. Although the state of South Carolina does not levy an Estate Tax, the Federal government does.

8. Retirement Plan Strategies to Maximize Tax Impact

While the OBBB Act doesn’t change contribution rules for retirement plans, it offers a powerful indirect planning opportunity—especially for business owners and high-earning executives compensated in a consulting capacity.

  • Lower permanent tax brackets and extended QBI deduction thresholds give more room to contribute large amounts to retirement vehicles without exceeding QBI limits.
  • Consider setting up or maximizing contributions to:
    • Cash-balance plans
    • Defined benefit pension plans
    • High-limit profit-sharing or safe-harbor 401(k)s

These contributions can significantly reduce taxable income, potentially restoring full QBI deduction eligibility, while locking in tax savings for future years.

Why it matters: If your 2025 income is pushing past QBI thresholds, leveraging retirement contributions is a smart move. It also opens doors for later Roth conversions or legacy planning—helping you optimize taxes now and in the future.

Summary: Planning Tips for Business Owners

  1. Make equipment purchases in 2025–2026 to take advantage of full expensing.
  2. Review your team’s compensation, especially if they earn tips or overtime.
  3. Update your estate and succession plans to reflect the new exemption limits.
  4. Look at your SALT and charitable giving strategies—they may need adjusting.
  5. Educate your senior team about new deductions they may qualify for.
  6. Consider C-Corp strategies for QSBS planning if you’re preparing for a future sale or ownership transition.
  7. Revisit your Retirement Plan to help take full advantage of the other deductions that phase out- these higher amounts can create more incentive to make contributions to retirement plans or start a new one.

Bottom Line:

The OBBB Act delivers major tax updates: tax rate changes, additional write-offs, and planning opportunities. But with opportunity comes complexity—eligibility rules, income limits, and expiration dates all matter (most temporary provisions sunset by the end of 2028).

Smart business owners are already reviewing their structure, compensation plans, and investment timing to stay ahead of the curve.

Want to learn how to make the most of these changes?
Follow this link to schedule a strategy session today.

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Important Information & Disclosure:
The information provided here is for summary purposes only and should not be construed as tax advice. Please consult your own tax advisor and legal counsel to evaluate how these changes apply to your specific situation. ArisGarde and its affiliates are not liable for actions taken based on this information. Securities are offered through Lion Street Financial, LLC (LSF), member FINRA & SIPC. Investment Advisory Services are offered through Lion Street Advisors, LLC. LSF is not affiliated with ArisGarde.