On July 4, 2025, the One Big Beautiful Bill Act was signed into law. While the legislation itself is broad, the IRS released an official bulletin on August 6 summarizing four key tax-related provisions that will directly impact individuals, families, and businesses beginning in 2025.
If you’re a business owner, or part of a family that owns or operates a business, it’s important to understand how these changes could affect your tax strategy. Below is a summary of the IRS guidance and what each item could mean for you.
1. Expanded Standard Deduction
The IRS bulletin confirms an increase in the standard deduction for tax year 2025:
- $16,000 for single filers
- $32,000 for married couples filing jointly
What this means:
For families, a larger standard deduction could reduce taxable income, especially if you don’t typically itemize deductions. This simplifies filing for many households and may increase your take-home income.
For business owners, this change doesn’t impact business taxes directly, but it may influence how you think about owner compensation or year-end distributions. For example, sole proprietors or pass-through entity owners whose household income runs through personal returns may see more benefit from the standard deduction than before.
2. Adjusted Capital Gains Threshold
Beginning in 2025, the capital gains tax threshold will increase. The IRS notes that the new threshold will apply to:
- Sale of investments (stocks, mutual funds, etc.)
- Real estate transactions
- Certain business asset sales
While the bulletin did not specify the exact income level at which higher capital gains tax rates will apply, it clarified that thresholds will now be indexed annually for inflation.
What this means:
For individuals and families, this could affect how and when you sell appreciated assets. Planning ahead will help you minimize exposure, especially for those with investments, real estate holdings, or inheritances.
For business owners, this change could have significant implications for succession and exit planning. If you’re planning to sell a business, liquidate appreciated property, or transfer assets, timing and structure will be more important than ever.
3. Increased Small Business Expensing Limits
The IRS bulletin outlines a rise in the Section 179 expensing limit for qualified business purchases, including equipment and technology. The new limit for 2025 is $2.5 million, with a phase-out threshold of $4 million.
What this means:
This is a key planning opportunity for business owners looking to upgrade infrastructure, invest in growth, or modernize operations. Expensing eligible purchases immediately (rather than depreciating over time) may reduce taxable income in the current year.
For families who run capital-intensive businesses, this can be a useful tool to reinvest in operations while managing your tax position. But it’s important to match purchases with projected cash flow and long-term planning.
4. Child Tax Credit Modifications
Starting in 2025, the Child Tax Credit will:
- Increase to $2,200 per qualifying child
- Include partial refundability up to $1,500
- Phase out for higher-income households starting at adjusted gross incomes of $250,000 (single) and $400,000 (joint)
What this means:
Families with children under 17 may see a modest increase in their total credit. If you’re in a lower or middle income bracket, the refundability feature could increase your refund — even if you don’t owe much in tax.
For business owners, especially those with children or employees who qualify for the credit, this could affect overall household tax planning or conversations with staff during benefits discussions.
What Comes Next
These provisions are now law, and most of them take effect January 1, 2025. While the IRS bulletin offers clarity, the real impact will depend on your income structure, entity type, family status, and long-term goals.
Now is the right time to evaluate how these changes will affect both your business and your family’s 2025 tax picture.
There’s no one-size-fits-all response to these updates, but there are smart moves you can make now to stay ahead of them. Whether it’s planning for a future sale, maximizing deductions, or adjusting your family’s tax strategy, we’re here to help you take the next step with clarity.
Schedule a consultation with our team to start planning now.