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Tax Credits

What Did the Big Beautiful Bill Change for Small Business Taxes?

The 2025 tax law (P.L. 119-21, which the IRS now calls the Working Families Tax Cuts) made 100% bonus depreciation permanent for property acquired after January 19, 2025, raised the Section 179 limit, restored immediate deductions for domestic research costs, and raised the 1099-NEC reporting threshold to $2,000 for 2026 payments. It also ended some clean energy incentives early. It isn't a grant program.

100%The biggest changes: a permanent 100% bonus depreciation deduction for qualified property acquired after January 19, 2025, a higher Section 179 expensing limit, an immediate deduction again for domestic research and experimental costs, a higher reporting threshold for Forms 1099-NEC and 1099-MISC, and a permanently expanded paid family leave credit.
$2,500,000Section 179: the expensing limit rose to $2,500,000, indexed for inflation.
$2,560,000For tax years beginning in 2026, it is $2,560,000, phasing out once qualifying purchases top $4,090,000.
$4,090,000For tax years beginning in 2026, it is $2,560,000, phasing out once qualifying purchases top $4,090,000.

The One, Big, Beautiful Bill Act (Public Law 119-21, signed July 4, 2025), which the IRS now calls the Working Families Tax Cuts, changed several taxes that small businesses deal with every year. The biggest changes: a permanent 100% bonus depreciation deduction for qualified property acquired after January 19, 2025, a higher Section 179 expensing limit, an immediate deduction again for domestic research and experimental costs, a higher reporting threshold for Forms 1099-NEC and 1099-MISC, and a permanently expanded paid family leave credit. It also ended some clean energy incentives early. It's a tax law, not a grant program: it doesn't hand out money to businesses directly.

Last checked: October 30, 2026. This page lists changes confirmed on IRS pages tonight. It is general information, not tax, legal, or financial advice, and it doesn't cover every provision in the law.

The short version

Equipment	100% bonus depreciation is permanent for qualified property acquired after January 19, 2025.
Section 179	the expensing limit rose to $2,500,000, indexed for inflation. For tax years beginning in 2026, it is $2,560,000, phasing out once qualifying purchases top $4,090,000.
Research costs	domestic research or experimental expenditures can be deducted in the year paid or incurred, for tax years beginning after December 31, 2024.
1099s	the reporting threshold for most Form 1099-NEC and 1099-MISC payments rose from $600 to $2,000 for payments made in 2026.
Paid leave	the employer credit for paid family and medical leave is now permanent and expanded.
Ended early	the commercial clean vehicle credit (45W) for vehicles acquired after September 30, 2025, and the 179D deduction for buildings whose construction begins after June 30, 2026.

Depreciation and expensing

Bonus depreciation: the law provides a permanent 100% additional first-year depreciation deduction for qualified property acquired after January 19, 2025. For the first tax year ending after that date, businesses can elect a smaller 40% rate instead (60% for certain long production period property and aircraft). See our guide to bonus depreciation in 2026.
Section 179: the maximum you can elect to expense rose from $1,000,000 to $2,500,000 for property placed in service in tax years beginning after December 31, 2024, with the phase-out starting at $4,000,000. Both amounts are indexed for inflation after 2025. For 2026 the IRS figures are $2,560,000 and $4,090,000. See our guides to the Section 179 deduction limit for 2026 and which vehicles qualify for Section 179.

Research and development costs

New Section 174A: for tax years beginning after December 31, 2024, businesses can deduct domestic research or experimental expenditures in the year they're paid or incurred, or elect to amortize them over at least 60 months. Foreign research costs still have to be amortized over 15 years.
Small business look-back: businesses that met the gross receipts test (average annual gross receipts of $31,000,000 or less for a tax year beginning in 2025) could elect to apply the new rule back to tax years beginning after December 31, 2021. Under IRS Revenue Procedure 2025-28, amended returns for that election generally had to be filed by July 6, 2026.
The research credit itself is separate. See our guides to who is eligible for the R&D tax credit and using the R&D credit against payroll taxes.

Owners, employees and paperwork

Qualified business income deduction	for tax years beginning after 2025, eligible owners of sole proprietorships, partnerships and S corporations with at least $1,000 of qualified business income from an active trade or business get a minimum deduction of $400, according to IRS Revenue Procedure 2025-32.
Paid family and medical leave credit	made permanent and expanded to cover employees with six months of service and part-time employees who usually work at least 20 hours a week. It can also apply to insurance premiums for leave coverage.
Student loan help	employers can keep paying up to $5,250 a year toward an employee's education, including qualified student loan payments, tax-free to the employee through a written Section 127 educational assistance program. The IRS says this is now permanent.
Forms 1099-NEC and 1099-MISC	for payments made in 2026, the reporting threshold for most payments is $2,000 (it was $600), adjusted for inflation after 2026.
Payment apps and platforms	under the updated law, backup withholding on payments through third-party platforms generally applies only when a payee gets more than $20,000 and more than 200 transactions in a year, instead of the $600 threshold scheduled under prior law.
Employee Retention Credit	the law limits ERC credits and refunds for the third and fourth quarters of 2021 that were claimed after January 31, 2024.

What ended early

Qualified commercial clean vehicle credit (45W)	not allowed for vehicles acquired after September 30, 2025.
Energy efficient commercial buildings deduction (179D)	not allowed for property whose construction begins after June 30, 2026. See our 179D guide.
New and used clean vehicle credits for individuals (30D and 25E)	not allowed for vehicles acquired after September 30, 2025.

Who this affects

Businesses that buy equipment, machinery, vehicles or software.
Businesses that pay for research, product development or engineering work.
Owners of sole proprietorships, partnerships and S corporations who take the qualified business income deduction.
Employers that offer paid leave or education benefits, or pay contractors.
Businesses that planned on clean vehicle or energy-efficient building incentives.

Who qualifies

Section 179: the maximum you can elect to expense rose from $1,000,000 to $2,500,000 for property placed in service in tax years beginning after December 31, 2024, with the phase-out starting at $4,000,000.
New Section 174A: for tax years beginning after December 31, 2024, businesses can deduct domestic research or experimental expenditures in the year they're paid or incurred, or elect to amortize them over at least 60 months.
The research credit itself is separate.
Qualified business income deduction: for tax years beginning after 2025, eligible owners of sole proprietorships, partnerships and S corporations with at least $1,000 of qualified business income from an active trade or business get a minimum deduction of $400, according to IRS Revenue Procedure 2025-32.

How to get it

How to get started

List what you bought or placed in service in 2025 and 2026, and when you acquired it, since the January 19, 2025, date matters for bonus depreciation.
Gather research and development costs by year, separating domestic and foreign work.
Check which contractors you paid $2,000 or more in 2026 so your 1099s are right.
Review any clean vehicle or building projects against the cutoff dates above.
Go over the changes with a tax professional before you file, since many rules have elections and exceptions.

Programs that may match

Look beyond the tax law

Look beyond the tax lawThe law changes taxes, not grants.

FAQ

What did the Big Beautiful Bill change for small businesses?

It made 100% bonus depreciation permanent for property acquired after January 19, 2025, raised the Section 179 limit to $2,500,000 (indexed; $2,560,000 for 2026), restored immediate deductions for domestic research costs, raised the 1099-NEC and 1099-MISC reporting threshold to $2,000 for 2026 payments, and made the paid family leave credit permanent.

Does the Big Beautiful Bill give grants to small businesses?

No. It's a tax law. The IRS summary of its business provisions lists deductions, credits and reporting rules, not grant programs.

Is bonus depreciation 100% in 2026?

Yes, for qualified property acquired after January 19, 2025. The IRS says the 100% deduction is permanent.

What is the 1099 threshold for 2026?

For most payments reported on Form 1099-NEC or 1099-MISC, it's $2,000 for payments made in 2026, up from $600. It will be adjusted for inflation after 2026.

Did the bill end any business tax credits?

Yes. The commercial clean vehicle credit (45W) ended for vehicles acquired after September 30, 2025, and the 179D deduction ends for buildings whose construction begins after June 30, 2026.