Top Tax Changes for Small Businesses and Wage Earners in Late 2025
The One Big Beautiful Bill (OBBA) has rewritten the tax landscape in 2025. While most headlines focus on the end of clean-energy credits, there are also new opportunities and important rule changes for small businesses and working individuals.
If you’re a business owner or wage earner, here are the tax changes you need to know now, and how to prepare before year-end.
New Deductions for Tips and Overtime
For the first time, the OBBA creates new deductions designed to help wage earners:
Tip deduction: Qualified employees can now deduct a portion of reported tips, reducing taxable income.
Overtime deduction: Workers who put in extra hours may be eligible to deduct part of their overtime pay.
These changes are meant to support service-industry workers and hourly employees, but the details are strict. Documentation will be key when filing.
Section 179 Expensing Boost for Small Businesses
Small businesses often rely on Section 179 expensing to deduct the full cost of equipment or technology purchases in the year they’re placed in service. OBBA increases the deduction limits, meaning businesses can expense more upfront instead of spreading the cost over several years. This is especially helpful for:
Office equipment and software
Vehicles for business use
Machinery or tools
If you’re planning major purchases, timing matters. Buying and placing assets in service before year-end could significantly reduce your 2025 tax bill.
SALT Deduction Cap Increase
The State and Local Tax (SALT) deduction cap has been adjusted under OBBA. For taxpayers in high-tax states, this could translate into larger itemized deductions and lower federal tax liability. If you own property or pay significant state income tax, review whether itemizing makes sense for 2025.
Clean Energy Incentive Phaseouts
In addition to wage and business changes, OBBA has accelerated the phase-out of clean energy credits:
EV credits end September 30, 2025
Solar and home energy credits end December 31, 2025
EV charger credits end June 30, 2026
If your business or household has planned upgrades, act now while credits are still available.
Action Steps Before Year-End
Track your wages. If you work overtime or earn tips, keep accurate records to support new deductions.
Plan equipment purchases. Take advantage of higher Section 179 limits before December 31.
Review itemizing. With the new SALT cap, itemizing may be more valuable than in prior years.
Check clean energy projects. Ensure EV, solar, or efficiency purchases are completed before deadlines.
Consult a professional. Rules are complex, and missing documentation could cost you deductions.
The OBBA bill isn’t just about clean energy. It brings new deductions for wage earners, expanded expensing for small businesses, and adjusted SALT limits that can change how you file.
These opportunities won’t last forever, and mistakes could cost you.
At The Virtual CPAs, we help individuals and businesses navigate tax law changes and maximize savings.