How the New OBBBA Law Impacts Small Businesses

How the New OBBBA Law Impacts Small Businesses

A Practical Guide for Colorado Entrepreneurs Navigating the New Tax Landscape

With the Tax Cuts and Jobs Act (TCJA) originally set to expire after 2025, many small business owners were preparing for increased taxes and fewer deductions. But with the recent passage of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, there is a new reality that brings both relief and important planning opportunities.

If you are a small business owner in Littleton, Centennial, or anywhere across Colorado, this guide will help you understand what is changing, what is staying the same, and how to position your business for success under the new law.

First, What’s Been Extended?

Many of the key provisions from the TCJA were set to expire, but OBBBA makes several of them permanent or extends them long-term:

• Lower individual tax rates stay in place
• Increased standard deduction remains
• The 20% Qualified Business Income (QBI) deduction is extended
• Bonus depreciation for equipment and vehicles is back at 100%
• Expanded Child Tax Credit grows from $2,000 to $2,200 per child
• Estate and gift tax exemptions rise to $15 million per individual

This means more breathing room for small business owners when it comes to income taxes, deductions, and investment planning.

What’s New in OBBBA for Small Business Owners?

1. No Tax on Tips (Up to $25,000)

Workers in tip-based industries including restaurants, salons, and service businesses can now deduct up to $25,000 of reported tips from their taxable income if certain conditions are met.

2. Overtime Deduction

Employees can deduct the extra pay they earn from overtime hours, up to $12,500 for individuals or $25,000 for married couples. This rewards hard work and encourages growth in service-based industries.

3. Car Loan Interest Deduction

If you financed a car for business use between 2025 and 2028, you may now deduct interest on the loan, up to $10,000. Restrictions apply (U.S.-assembled, 14,000 lbs or under, personal-use limits).

4. Trump Accounts for Children

Parents of children born between 2025 and 2028 can now open tax-advantaged Trump Accounts with federal contributions. Though not directly related to business, this could impact household financial planning and tax savings for owner-operators with families.

What About the SALT Cap and Mortgage Interest?

SALT Deduction Limit Changes

The State and Local Tax (SALT) deduction cap has been raised to $40,000 for most taxpayers beginning in 2025, phasing out at higher incomes. This is a significant boost for Colorado residents who itemize and pay higher property taxes.

Mortgage and Mortgage Insurance Deductions

OBBBA keeps the mortgage interest deduction at $750,000 of principal but brings back the deduction for certain mortgage insurance premiums, allowing you to include them as part of your qualified residence interest.

What You Still Need to Plan For

Not all the news is hands-off. You will want to work closely with your tax advisor on these changes:

• QBI Deduction Phaseouts Have Been Adjusted: Higher income thresholds mean more small business owners may qualify, but rules are still complex.
• Charitable Deductions for Non-Itemizers: You can now deduct up to $2,000 in qualified donations even if you do not itemize.
• Bonus Depreciation Timing: Plan your large business purchases wisely to benefit from the renewed 100% deduction.
• Casualty Losses Expanded: Both federal and state-declared disasters now qualify.

Action Steps to Maximize Your Tax Position

Revisit your bookkeeping systems
With so many new deductions, clear records matter more than ever. Our accurate accounting services make it easy to track qualified expenses and deductions correctly.

Strategize with your payroll
If you or your employees work overtime or earn tips, make sure your payroll setup tracks these earnings separately to take full advantage of new deductions.

Evaluate big-ticket purchases
From vehicles to equipment, now may be the perfect time to upgrade using bonus depreciation, especially before 2028.

Prepare for new reporting rules
Talk with your tax professional to ensure you are documenting overtime, tips, and donations properly. The IRS will be looking for accuracy under these new deductions.

Explore Bookkeeping for Small Business

Want a Trusted Guide Through These Changes?

At Perlinger Consulting, we help small businesses in Littleton, Centennial, and across Colorado make sense of their finances. With over 23 years of experience, Glenn and the team specialize in practical bookkeeping that helps you:

• Save time
• Reduce stress
• Prepare your documents for tax season with confidence

Whether you are running a one-person shop or managing a crew, our remote and in-person support keeps your books clean and your questions answered.

Call Glenn at 720‑290‑4389
www.perlingerconsulting.com

Disclaimer: This article is for educational purposes only and does not constitute legal, tax, or financial advice. Tax laws are subject to change. Always consult with a licensed professional. For updates and official IRS guidance, visit IRS.gov.