Big Beautiful Bill Breakdown Part 2: Sole Proprietorship

What is it?

Sole proprietorships are when an individual owns and operates a business. Starting in 2025 comes a new deduction minimum that will be adjusted for inflation starting in 2026. Also increasing deduction thresholds starting at $75,000. The One Big Beautiful Bill also extended the Qualified Business Income (QBI) deduction of 20% for sole proprietorships and other pass-through businesses more permanently removing the prior December 31, 2025 expiration. Meaning that from now on there will be a less tax liability on federal income taxes and will free up more cashflow.

How does this affect you?

These changes allow for individuals who are sole proprietors to get more deductions and reduce their tax liabilities, while also streamlining the process for filing these taxes. The One Big Beautiful Bill gives even more tax liability reductions in the forms of increasing the Section 179 Expensing, giving 100% depreciation on eligible new equipment purchases, giving provision to research and development, business interest and qualified Opportunity Zones. All of these will help reduce tax liability for sole proprietors along with freeing up the cash flow, for more investment and growth for their businesses. 

Why is this important?

These changes are going to affect sole proprietors in this upcoming tax year the most as they swap over to the new additions to the filing. These changes do however benefit sole proprietors as this will allow them more cash for investing back into the business to grow and improve in their markets. Overall leading to more incentives for sole proprietorship.

How can we help you?

Reach out via our phone number, email or website to book a consultation with our talented staff to see how we can help you to better understand how this will affect you and to help you gain insights to your taxes and get them filed properly and securely