Recent changes to federal tax law, specifically the enactment of the One Big Beautiful Bill Act, have introduced several updates that impact entrepreneurs and business owners. These changes create new opportunities for tax savings, but only for those who take action before the end of the current tax year. The following analysis outlines three primary tax strategies that entrepreneurs should evaluate to optimize their tax position under the new legislation.

1. Review and Adjust Business Entity Structure

The choice of business entity,C corporation, S corporation, partnership, or sole proprietorship,directly affects tax liabilities. C corporations are taxed at a flat 21% rate, which is lower than most individual rates. This structure may be advantageous for businesses that plan to reinvest profits rather than distribute them. However, C corporations are subject to double taxation: once at the corporate level and again at the shareholder level when dividends are paid.

Pass-through entities, such as S corporations, partnerships, and sole proprietorships, allow business income to be taxed at the individual level, avoiding double taxation. The new law makes the 20% qualified business income (QBI) deduction permanent for these entities, but the deduction is subject to wage and income limitations. High-income earners may see the deduction phased out. Entrepreneurs should consult with tax professionals to determine if their current entity structure remains optimal under the new rules and to make any necessary adjustments before year-end.

2. Utilize 100% Bonus Depreciation and Cost Segregation

The updated legislation reinstates 100% bonus depreciation for qualifying property acquired and placed in service after January 19. This provision allows businesses to deduct the full cost of eligible assets in the year of acquisition, rather than depreciating them over several years. Cost segregation studies can further accelerate depreciation by identifying property components with shorter useful lives.

When properly executed, cost segregation and bonus depreciation can result in significant tax deductions. Concerns about increased IRS scrutiny are mitigated when these strategies are implemented by qualified professionals in compliance with tax regulations. Entrepreneurs should coordinate with tax advisors and cost segregation experts to ensure accurate analysis and to avoid generating net operating losses that cannot be fully utilized.

3. Optimize State and Local Tax (SALT) Deductions

The new law increases the SALT deduction cap from $10,000 to $40,000 for the upcoming year, with further incremental increases planned through 2030. This change provides additional deduction capacity for entrepreneurs in high-tax states. Some states have implemented entity-level tax payment workarounds for pass-through entities, allowing these taxes to be deducted as business expenses.

Entrepreneurs should analyze whether the traditional SALT deduction or the entity-level workaround yields greater tax savings, based on their income and business structure. A detailed review with a tax advisor is recommended to ensure compliance and to maximize available deductions.

Conclusion

The One Big Beautiful Bill Act introduces significant tax planning opportunities for entrepreneurs, but these benefits are contingent on timely action. Reviewing business entity structure, leveraging bonus depreciation and cost segregation, and optimizing SALT deductions are critical steps. Engaging with tax professionals before year-end is essential to ensure compliance and to maximize tax savings under the new law.