On July 4, 2025, President Trump signed H.R. 1—formally titled “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14,” widely known as the “One Big Beautiful Bill.” This legislation makes permanent several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introduces targeted updates affecting businesses of all sizes. For small and midsize businesses (SMBs) in Ohio and beyond, the bill brings a mix of tax incentives, compliance changes, and planning opportunities. This guide explains the key provisions as they apply to SMBs.
1. Corporate Tax Rate: No Increase
The 21% rate, first set by the TCJA in 2017, is made permanent by the 2025 bill. Most SMBs are structured as pass-through entities (LLCs, S corporations, sole proprietorships) and are not directly affected by the corporate rate. C corporations will continue to benefit from the 21% rate, but there is no additional cut.
2. Pass-Through Income Deduction (Section 199A QBI)
The new tax law makes the Section 199A Qualified Business Income (QBI) deduction permanent and increases the deduction rate from 20% to 23% for most businesses, beginning in 2026. While service-based businesses such as law, accounting, and consulting firms remain subject to income-based phaseouts, the law raises the thresholds for these limits and modifies the phaseout calculation, allowing more service businesses to qualify for at least a partial deduction. Overall, the QBI deduction is now both permanent and more generous than under previous law.
3. Bonus Depreciation
The new bill permanently restores 100% bonus depreciation for most equipment purchases placed in service after January 19, 2025. The previous phase-out schedule (with 40% in 2025 and further reductions) only applies to assets placed in service before that date. Businesses can now fully expense qualifying assets immediately, reversing the scheduled phase-out.
4. Health Insurance Premium Credits
The existing small business health care tax credit remains at up to 50% for qualifying small businesses and up to 35% for tax-exempt employers, with no new broad 20% premium-based credit introduced.
Legal and Strategic Considerations for Ohio SMBs
Entity Structure
With the corporate tax rate remaining at 21% and the QBI deduction made permanent, pass-through and C corporation structures should be reviewed for optimal tax outcomes.
Sector-Specific Outcomes
Manufacturing, construction, and tech: Benefit from bonus depreciation, though at reduced rates.
Service Firms: QBI deduction phaseouts still apply, but higher thresholds may help more qualify.
Startups: No major new federal startup credits, but existing state and federal incentives remain.
IRS Enforcement
The new tax law increases IRS funding and enforcement efforts, with a particular focus on high deduction claims and pass-through entities. This builds on previous investments and is intended to enhance compliance among high-income individuals, large corporations, and complex business structures, ensuring that tax obligations are properly met in areas prone to tax avoidance.
Next Steps for Business Owners
There are several proactive steps you can take to ensure your company is in compliance with any changes in the new law, including:
Meet with your CPA and business attorney to review your entity structure.
Model the impact of reduced bonus depreciation on future equipment purchases.
Review QBI deduction eligibility under updated thresholds.
Explore available state and federal hiring and health insurance credits.
Prepare for increased audit scrutiny with thorough documentation.
Strategic Planning Remains Essential
The “One Big Beautiful Bill” makes several business tax provisions permanent and introduces targeted changes. Careful planning remains essential to maximize available deductions and credits under the updated tax code.
Contact a Gertsburg Licata business attorney today to discuss how these legal changes may affect your business.
Sources
H.R. 1, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14” (One Big Beautiful Bill), 119th Congress
IRS, Tax Code Sections (Internal Revenue Code)
Tax Foundation. “Small Businesses and the Tax Code: 2025 Outlook.”
U.S. Small Business Administration (SBA)
Disclaimer
The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. It does not establish an attorney-client relationship, and any reliance on the information contained herein is done at your own risk. For specific legal guidance tailored to your business and jurisdiction, it is recommended to consult with a qualified attorney who can provide professional advice based on your unique circumstances.
