The One Big Beautiful Bill: What It Means for Small Business Owners in 2026

What Is the One Big Beautiful Bill Act?

The One Big Beautiful Bill Act (OBBBA) is landmark federal legislation passed in 2025 that makes sweeping, permanent changes to the U.S. tax code. For small business owners, it is the most important piece of tax legislation since the Tax Cuts and Jobs Act (TCJA) of 2017 — and in many ways even more impactful, because it eliminates the uncertainty that had loomed over those earlier provisions.

Rather than temporary measures set to expire, the OBBBA locks in tax benefits permanently, giving business owners the confidence to plan years ahead. Here is a breakdown of the major provisions and how they affect you.

TCJA Provisions Made Permanent

Many of the tax cuts introduced by the TCJA in 2017 were set to expire at the end of 2025. The OBBBA permanently extends all of them.

Lower individual income tax rates — The reduced brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent law.

Doubled standard deduction — For 2026, the standard deduction is $16,100 for single filers and $32,200 for married filing jointly.

20% pass-through deduction (Section 199A) — The deduction for qualified business income from sole proprietorships, S-corps, and partnerships is now permanent. This is a massive win for self-employed professionals and small business owners.

Increased estate and gift tax exemption — The elevated exemption (~$13.9 million per individual in 2026) is permanently extended, a critical benefit for family-owned businesses with succession planning needs.

100% Bonus Depreciation Is Back — Permanently

One of the most powerful provisions in the OBBBA is the permanent restoration of 100% bonus depreciation. Bonus depreciation had been phasing down — 80% in 2023, 60% in 2024, and 40% in 2025. The OBBBA resets it to 100% and makes it permanent.

If you buy equipment, machinery, vehicles, computers, or other qualifying business property in 2026 and beyond, you can deduct the entire cost in the year of purchase. This dramatically accelerates your deductions and reduces your tax liability in the year you invest in your business.

Section 179 Expensing — Now $2,560,000

In 2026, you can immediately expense up to $2,560,000 in qualifying business assets under Section 179, with a phase-out beginning at $3,050,000 in total purchases. Section 179 and bonus depreciation work hand-in-hand — for most small businesses, Section 179 covers everything you need, while bonus depreciation picks up the rest on larger purchases.

Business Interest Deduction Restored

The OBBBA restores the more generous EBITDA-based calculation for the business interest expense deduction. This is especially beneficial for capital-intensive businesses that carry debt, as it allows you to deduct more of your interest expense than was permitted under the prior EBIT-based measure.

R&D Expensing Restored

The OBBBA restores immediate R&D expensing, allowing businesses to deduct qualifying research and development costs in full in the year they are incurred. This reverses the five-year amortization requirement that had been in place since 2022 — a significant relief for innovative small businesses investing in new products or processes.

Retirement Contribution Limits in 2026

Retirement limits have increased for 2026 and pair powerfully with the OBBBA provisions. With the pass-through deduction now permanent, maximizing these contributions is especially impactful for self-employed individuals and small business owners.

401(k) / Solo 401(k) — $24,500 employee contribution limit ($31,000 if age 50+)

IRA / Roth IRA — $7,500 annually ($8,500 if age 50+)

SEP IRA — Up to $72,000 or 25% of compensation, whichever is less

SIMPLE IRA — $17,600 ($21,700 if age 50+)

Standard Mileage Rate: 72.5 Cents Per Mile

The IRS has set the standard mileage rate at 72.5 cents per mile for business driving in 2026. If you use your vehicle for business, log every mile — at that rate, it adds up fast and is one of the simplest deductions available to any business owner.

1099 Reporting Threshold: Now $2,000

Starting in 2026, the reporting threshold for 1099-NEC and 1099-MISC forms has increased to $2,000, up from $600. If you pay a contractor less than $2,000 in a calendar year, you are no longer required to issue a 1099 — reducing paperwork significantly for businesses that work with many freelancers or vendors.

Your 2026 Action Checklist

Plan major equipment purchases now — With 100% bonus depreciation permanent, there has never been a better time to invest in your business infrastructure.

Confirm your Section 199A eligibility — The 20% pass-through deduction is locked in permanently. Make sure your business structure is optimized to capture it.

Maximize retirement contributions — Higher limits combined with the pass-through deduction create compounding tax savings year after year.

Review your business interest expense — If you carry business debt, the restored EBITDA calculation may allow larger deductions than in recent years.

Track every business mile — At 72.5 cents per mile, a mileage log is one of the simplest high-value deductions available to any business owner.

Work with a CPA — The OBBBA creates powerful planning opportunities, but maximizing them requires a strategy tailored to your specific business situation.

Bottom Line

The One Big Beautiful Bill Act is overwhelmingly positive news for small business owners. With TCJA provisions now permanent, 100% bonus depreciation restored, and the pass-through deduction locked in for the long term, the tax environment in 2026 is among the most favorable for entrepreneurs in decades. At Accounting BOSS, we stay on top of every legislative change so you do not have to — reach out if you have questions about how the OBBBA affects your specific situation.