The newly signed tax bill brings with it a range of changes that could impact how business owners approach growth, cash flow management, and long-term planning. While most provisions won’t require major adjustments, several updates create opportunities for those who plan ahead.
At Connecticut Wealth Management (CTWM), we recognize how closely your business decisions are tied to your personal financial goals. We’ve guided business owners through shifting tax landscapes before—and this is no exception.
From identifying opportunities to reduce taxable income to evaluating reinvestment or succession strategies, our team is exploring how these changes may inform your broader plan. Here’s what you need to know.
Key Provisions that May Impact Your Business:
1. Qualified Business Income (QBI) Deduction Made Permanent: The 20% deduction for pass-through income is now permanent, with expanded phase-in thresholds of $75,000 (single) and $150,000 (married filing jointly). A new minimum deduction of $400 (indexed) applies to QBI over $1,000.
This adds clarity for pass-through business owners and strengthens long-term planning around compensation, cash flow, and retirement contributions.
2. Qualified Small Business Stock (QSBS) Benefits Expanded: For investors or founders holding Qualified Small Business Stock issued after the bill’s enactment, gain exclusions now scale up over time: 50% after three years, 75% after four, and 100% after five. In addition, the per-issuer cap increases to $15 million, and the asset threshold rises from $50 million to $75 million, indexed for inflation.
These updates broaden QSBS eligibility, and may offer tax advantages for founders, early investors, and owners planning for a future liquidity event.
3. Expanding R&D Expensing: Domestic R&D expenses are now permanently deductible in the year incurred. Small businesses (under $31 million in gross receipts) can also retroactively expense qualified R&D costs dating back to 2022.
If your business prioritizes innovation, this could unlock tax savings while supporting reinvestment in growth.
4. 100% Bonus Depreciation Made Permanent: Businesses can now permanently deduct the full cost of qualifying short-lived assets, such as equipment and technology, in the year those assets are placed in service.
This provision supports capital-intensive businesses and may help accelerate deductions and preserve cash.
5. New Expensing Opportunity for Manufacturers: Manufacturing structures placed in service by January 1, 2031, and begun between January 19, 2025, and January 19, 2029, are now eligible for full expensing.
Manufacturers planning expansion or relocation may be able to take advantage of upfront tax deductions, depending on project timing and eligibility.
6. Interest Deduction Reverts to EBITDA: The limit on business interest deductions will once again be based on EBITDA (rather than EBIT), a more favorable formula for many leveraged businesses.
If your business carries debt or is planning for acquisition financing, this provision may enhance your ability to deduct interest and preserve working capital.
7. Qualified Opportunity Zones (QOZs) Made Permanent: The QOZ program is now permanent. For post-2026 investments, deferred gains are recognized after five years, with a 10% basis step-up.
This extension preserves a valuable tool for tax-efficient reinvestment, especially after the sale of a business.
Move Forward with a Business-Aligned Strategy
The most impactful planning happens before change becomes urgent. With your business, family, and long-term goals closely connected, now is the time to evaluate how these new provisions could support your next move.
Whether you’re reinvesting in growth, adjusting your compensation structure, or planning for a future exit, our team is actively discussing these changes with business owners to identify how they may impact future planning. Have questions? Your CTWM advisory team is here to help you move forward with clarity and confidence.
Disclosure:
The information provided is for general informational purposes only and does not constitute tax, legal, or investment advice. The legislative landscape is evolving, and this summary does not include all provisions or nuances of the final legislation signed into law on July 4, 2025. We encourage you to consult with your tax professional or financial adviser to understand how these developments may apply to your personal situation.
CTWM does not provide tax or legal advice. Investment advisory and financial planning services are provided through CTWM, a registered investment adviser.