The One Big Beautiful Bill Act: Using Tax Tools the Right Way

I recently served as a panelist discussing the new 2025 tax law, formally known as the One Big Beautiful Bill Act (OBBBA), and its sweeping changes for small and mid-sized businesses.

The room was filled with sharp business owners and seasoned advisors: manufacturers, contractors, healthcare operators, and professional service leaders. Everyone wanted to understand how the new rules might affect their next move.

Here is the truth I shared: new deductions are not strategy; they are tools, shiny tools. And like any tool, they can hurt you if used for the wrong job. The OBBBA is packed with generous deductions, accelerated write-offs, and attractive incentives. The real skill lies in knowing which ones fit your business and which ones do not.

1. The Highlights Everyone Is Talking About

The OBBBA delivers several headline provisions:

• 100% Bonus Depreciation returns for most qualified property placed in service after January 2025!

• Section 179 Expensing increases to a two point five million dollar deduction limit with a four million dollar phase-out.

• The Qualified Business Income (QBI) Deduction is made permanent, with expanded thresholds for professional service owners.

• The Interest Deduction under Section 163(j) reverts to thirty percent of EBITDA, a welcome change for leveraged firms. (Interest expense from Real Estate loans are still 100% deductible)

• Research and Experimentation (R&E) expenses can again be deducted immediately, with retroactive relief for prior years.

• The Qualified Small Business Stock (QSBS) exclusion increases to seventy-five million dollars in assets and now covers more industries.•

A new Qualified Production Property (QPP) category allows full expensing for newly built or converted manufacturing or industrial facilities.

On paper, it's a powerful toolkit: immediate write-offs, lower taxes, and faster recovery of investments. But some tools are more dangerous than useful—especially in the wrong hands.

2. The Shiny Object Trap

Tax incentives are designed to encourage investment, but too many business owners chase deductions without considering the broader financial impact. Buying equipment, changing entity structures, or accelerating expenses may reduce taxes today while creating cash flow pressure tomorrow. The OBBBA amplifies these temptations. With expanded deductions and faster write-offs, it is easy to act first and think later.

True business strategy begins with intent. The question is not “Can I deduct this?” but “Should I buy this for my business?” A purchase that does not strengthen your operations, or a structure that limits your flexibility, will cost more in the long run than it saves in the short term. Co-panelist Attorney Ryan Gardner put it best when he said with a perfect 🇨🇱 twang:

“Do not spend two hundred thousand dollars on fence to make five thousand in cattle.”

3. The Bigger Picture: Structure and Exit Strategy

One of the most discussed aspects of the new law is the expansion of the QSBS exclusion.

This provision allows owners of qualified C Corporations with up to seventy-five million dollars in assets to exclude significant capital gains upon sale, provided they meet the holding requirements. On paper, it is a powerful incentive. In practice, almost all small and mid-market transactions are structured as asset purchases rather than stock sales. Buyers favor asset deals because they can increase the tax basis of the acquired assets, avoid potential liabilities, and select which assets to acquire. That reality has not changed under the OBBBA. QSBS can still be valuable for certain C Corporations, particularly in technology, healthcare, and manufacturing sectors that attract strategic or private equity buyers. But it will not automatically convert every transaction into a stock sale.

Before restructuring, business owners should model both possibilities: the theoretical benefit of QSBS versus the practical structure their most likely buyer will prefer. Your entity structure should follow your exit plan, not the other way around. Converting to a C Corporation only makes sense if it supports your long-term strategy and cash flow goals.

4. What Really Drives Value

During the panel, I emphasized a point that often gets overlooked: clean financials and disciplined cash management are not just effective business strategies, they are also the most effective tax strategies. Accelerated deductions and new credits can only enhance a business that already runs well. They cannot fix weak margins, poor billing practices, or inconsistent reporting. The companies that will benefit most from the OBBBA are those that already manage with precision and accountability.

The Four Pillars Buyers Pay For

1. Cash Flow Visibility You cannot make good tax decisions without knowing your upcoming cash position. A rolling thirteen-week forecast converts uncertainty into control.

2. Accurate, Accrual-Based Financials GAAP-compliant records reduce audit exposure, simplify due diligence, and increase buyer confidence.

3. Operational Discipline Growth without process control leads to margin erosion. Scalable systems and clear accountability prevent that.

4. Exit Readiness Updated agreements, reconciled fixed assets, and removal of personal expenses signal a well-run operation. These fundamentals increase valuation and reduce deal friction.

   
   

The tax code consistently rewards businesses that operate with transparency and control. The OBBBA does not change that principle; it only enhances the rewards for those already practicing financial discipline.

5. Three Smart Moves Before Year-End

1. Plan Capital Spending With Intent

Only purchase what strengthens your operations or productivity. If equipment qualifies for full bonus depreciation, excellent, but ensure it aligns with your workload and financing capacity. A deduction that strains liquidity is not a smart investment. Have a minimum 3 year CAPEX plan, along side a 3 month cash-flow projection.

2. Re-Test Your Entity Structure

With the QBI deduction now permanent and QSBS expanded, this is the right time to model the outcomes for S Corporation, C Corporation, and partnership structures. Focus on after-tax cash flow, reinvestment needs, and your realistic exit horizon.

3. Prepare for Due Diligence Now

If you plan to sell or raise capital in the next three years, begin preparing today.

• Update leases and employment agreements.

• Reconcile fixed-asset schedules.

• Remove personal expenses from company records.

• Document revenue recognition and expense policies.

• Create an organized data room for potential buyers or lenders.

These steps will pay dividends regardless of whether you sell, borrow, or expand. Financial clarity builds confidence on every side of the table: buyers, investors, creditors and ... the IRS.

Closing Thought

The new 2025 tax law offers real flexibility, but flexibility without strategy leads to waste.

The winners will be those who use these provisions to strengthen their foundation rather than distort it.

Be selective. Use the incentives that fit your goals and ignore the rest. Tax breaks come and go, but operational excellence compounds forever.

If you want to understand which OBBBA provisions truly align with your business model, schedule a brief strategy modeling session. We will help identify where the incentives improve your operations, strengthen cash flow, and support long-term growth.