This video provides an update for business owners on significant tax law changes recently passed by the House. The speaker highlights key changes impacting deductions and tax incentives, emphasizing the potential benefits for small business owners.
Qualified Business Income (QBI) Deduction: The QBI deduction is now permanently set at 23%, allowing business owners to deduct 23% of their qualified business income before calculating their tax liability. This incentivizes business growth and economic stimulation.
Opportunity Zones: The Opportunity Zone program is revitalized. Investing capital gains in designated zones and holding for at least five years results in a 10% (or 30% in rural areas) stepped-up basis. Holding for ten years eliminates future taxes on gains from that investment.
Bonus Depreciation: Bonus depreciation is reinstated at 100%, retroactive to the beginning of 2025. This allows for full depreciation of qualifying assets (equipment, real estate) within the first year, potentially significantly reducing tax burdens.
Bonus Depreciation for Buildings: Businesses involved in manufacturing can fully depreciate the cost of new buildings in the first year, providing substantial tax savings and potentially offsetting losses.
Entertainment Deduction: The entertainment deduction is reinstated, allowing businesses to deduct 50% of entertainment expenses (previously eliminated).
Business Meals: The 100% write-off for business meals (previously limited to 50%) is restored.
Auto Loan Interest: Business owners can still deduct auto loan interest, regardless of whether they use mileage or bonus depreciation methods.
Overtime: While employees can receive tax-free overtime pay, business owners cannot deduct overtime paid to themselves without tax consequences; however, business owners still have to pay FICA taxes on employee overtime.
