How a New Tax Law Quietly Changed Everything for Business Owners
If you’re a business owner looking for tax savings, better retirement options, or ways to grow wealth through smarter reinvestment—this new law should be on your radar. The recently passed legislation, nicknamed the “Big Beautiful Bill,” introduces permanent tax breaks, new retirement incentives, and a major extension of the Qualified Business Income (QBI) deduction. At Cool Wealth Management, we specialize in helping Phoenix-area business owners take full advantage of strategies like these to lower taxes, build wealth, and align money with life goals.
Here’s a breakdown of the most impactful changes—and what you should do about them.
What Is the “Big Beautiful Bill”?
This 800+ page piece of legislation was designed to simplify parts of the tax code for small and midsize businesses, while encouraging long-term investment and retirement planning.
It affects seven critical areas:
Qualified Business Income Deduction
Tax deductions and depreciation
Retirement incentives
Business entity structure
Compliance and reporting
Succession and exit planning
Capital gains treatment
Let’s take a closer look at how each of these can affect your bottom line.
1. QBI Deduction Extended—Permanently
The biggest surprise? The Qualified Business Income deduction (QBI) is now permanent. Originally set to expire in 2025, QBI lets owners of pass-through entities like S-corps, partnerships, and sole proprietorships deduct up to 20% of their qualified income. For some high earners, this reduces the effective tax rate from 37% to under 30%.
There are still income limits and rules around wages and property—but with permanency, you can now build long-term plans around this benefit without fearing expiration.
2. Bigger Deductions and Accelerated Depreciation
The law raises Section 179 expensing to $2.5 million, letting you deduct qualifying equipment, software, and vehicles in the year you purchase them. No more waiting years for the full tax benefit.
Bonus depreciation continues through 2028, phasing down gradually:
80% this year
60% next year
And so on
There’s also a new 20% reinvestment deduction for spending on employee training, energy efficiency, or domestic production. That’s on top of your regular deduction—but documentation is key.
3. New Retirement Incentives for Business Owners
The new law offers real motivation to start or upgrade retirement plans:
A $10,000 annual tax credit (for 3 years) if you set up a 401(k) and have fewer than 50 employees
A Defined Benefit Accelerator allowing business owners over 50 to contribute large amounts—sometimes six figures—in year one
High earners ($150K+) must now make catch-up contributions in Roth accounts
Translation: If you’ve delayed setting up a plan, now’s the time to act. You may be leaving tax savings and future growth on the table.
4. Entity Structure Just Became More Important
Depending on how your business is taxed, your deductions may be larger—or smaller—under the new rules.
LLCs taxed as S-corps now qualify for the new reinvestment deduction
C-corps under $5 million that reinvest at least 60% of profits can access a reduced flat tax rate of 18%
If your CPA hasn’t revisited your entity structure in years, it might be time for a second opinion. The tax code just got reshuffled.
5. New Reporting Rules for Mid-Sized Businesses
Businesses earning over $500,000 per year must now file an annual Reinvestment Report outlining:
Retirement plan contributions
Reinvestment in the business
Employee development activities
Failure to report accurately could result in lost deductions or penalties. If your financial “system” is still a shoebox and a spreadsheet, it’s time to modernize.
6. Capital Gains Relief for Exit Planning
Thinking of selling your business one day? This law gives you a reason to plan ahead.
The capital gains exemption on qualifying business sales increases from $10 million to $15 million
You must own the business for at least 10 years
You must file a formal succession or sale plan with the IRS before the sale
Failing to plan could mean missing out on an extra $5 million in tax-free gains.
What Should Business Owners Do Now?
There are real opportunities in this bill—but they only matter if you act. Here are a few key steps to consider:
Review your entity structure to ensure you’re not leaving money on the table
Plan large purchases now to take full advantage of Section 179 and bonus depreciation
Set up or improve your retirement plan using available credits and catch-up options
Organize your books to prepare for new reporting requirements
Incorporate QBI savings into your long-term planning
Let’s Maximize Your Benefit
At Cool Wealth Management, we help business owners make smart decisions with taxes, retirement, and long-term planning—so they can keep more of what they earn and use it to build the life they want.
If you’re unsure how these new rules apply to your business, or want help making a proactive plan, reach out today. We’ll walk through it together.
Watch the video above, then contact us for a free consultation.
