OBBBA can give small-business clients opportunities for saving

Provisions in the One Big Beautiful Bill Act can give your small-business clients opportunities to save on their taxes and use the savings to improve their after-tax cash flow or do other types of business planning.

Ann Hagerty, director of advanced sales at Securian Financial, gave a rundown of some of these opportunities during a recent webinar from the National Association for Fixed Annuities.

One major area that OBBBA changed is Section 199A. This is the qualified business income deduction, which provides owners of pass-through businesses with a deduction of up to 20% of qualifying income. OBBBA made Section 199A permanent.

“If you work with small-business clients, ask them whether they use QBI deductions and, if they do, how the tax savings could be used for them to do some other planning within their business,” Hagerty said.

Under Section 199A, the new minimum QBI deduction is $400. Limitation rules were revised:

• The deduction is limited to the greater of 50% of W-2 wages or 25% of W-2 wages plus 2.5% of the unadjusted basis of qualified property.
• No phase-in range – the cap applies directly.

 

OBBBA made the most significant expansion of the IRS’ qualified small business stock rules since 2010, but it applies only for stock issued on or after July 4, 2025.

Under the previous rules, you had to hold QSBS for more than five years to get any exclusion. The new rules changed the gain excluded for certain holding periods:

Holding period	Gain excluded	What this means
3+ years	50%	Partial tax‑free exit
4+ years	75%	Large reduction in tax
5+ years	100%	Same as old law

The remaining (nonexcluded) gain under the 50% or 75% tiers is taxed at a 28% capital gains rate, not the usual 15%/20% rate. Even so, the effective rate is far lower than normal long‑term capital gains.

“QSBS can be a way for business owners to invest in their business and have the ability to get some more tax advantages when they sell stock in the future,” Hagerty said.

OBBBA changed Section 179, a provision of the U.S. tax code that allows businesses to deduct the cost of qualifying equipment and property in the year it’s placed in service, instead of depreciating it over many years.

Under Section 179, the maximum amount of property to be expensed is $2.5 million, an increase from the previous maximum of $1.25 million. Hagerty gave an example of how this works.

“We’re seeing a little more flexibility here with recovery of capital expenditures, so Section 179’s expensing limits are reinstating the permanent bonus depreciation,” Hagerty said. “Congress gave more tools to businesses to improve their after-tax cash flow. With more choice comes more complexity, so understanding that some of these additional deductions may be available to the business owner clients that you work with may give them an opportunity.”

© Entire contents copyright 2026 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.