Big Beautiful Bill (H.R.1) provisions that may effect your business

Big Beautiful Bill (H.R.1)  has passed and there are a number of provisions that might have an impact on area businesses. Below is a thoughtful list of those provisions although it may not be a complete list. Please contact your accountant or House of Representative to get more information. 

1. Small Business Tax Cuts Made Permanent

In 2017 the “Tax Cuts and Jobs Act” reduced federal taxes for most small business owners; the lower rates were scheduled to increase at the end of 2025. Now those tax cuts are permanent (SD Retailers spoke with Sen. Thune, Sen. Rounds and Rep. Johnson on this, the top priority in the bill). **SDRA

2. No Federal Income Taxes on Tips for Employees

The bill includes a federal income tax deduction of up to $25,000 in tipped wages for bartenders, servers, etc. The Treasury Dept. will publish an official list of qualifying jobs by this October. This provision is available from 2025 (applies to current year) to 2028.  **SDRA

3. No Federal Income Taxes on Overtime for Employees

The bill also includes a federal income tax deduction of up to $12,500 on overtime pay for hourly earners (or $25,000 if married filing jointly). Example: If an employee makes $12/hour in regular wages, and an $18/hour overtime wage, $6/hour counts toward the overtime deduction, not the entire $18/hour. This provision is available from 2025 (applies to current year) to 2028. NOTE: If you do not currently include overtime pay on your employee W-2s, you will likely need to begin doing so or include a supplemental statement documenting overtime pay. **SDRA

4. Immigration & Work Visa Programs

The bill includes about $175 billion in new funding for immigration-related issues, including $50 billion for the border wall and other facilities, $45 billion to detain illegal immigrants, and $30 billion for increased enforcement operations. In the near-term, these efforts will likely continue to reduce the availability of legal immigrant workers; in the long-term, this MAY pave the way for Congress to expand current work visa programs and expedite the path to citizenship, though these efforts will likely take time to implement.  **SDRA

5.  Extension of special allowance for certain property.

This provision will allow taxpayers to immediately expense 100 percent of the cost of qualified property acquired on or after January 20, 2025, and before January 1, 2030.  Under current law, taxpayers are generally required to deduct the cost of property used in a trade or business over a period of time. However, in the case of certain “qualified property” (including most equipment and machinery), a taxpayer is permitted to deduct a percentage of the cost in the first year that the property is placed in service (“immediate expensing”). For qualified property placed in service in 2025, a taxpayer is generally permitted to immediately expense 40 percent of the cost. For qualified property placed in service in 2026, a taxpayer is generally permitted to immediately expense 20 percent of the cost.   * Ways and Means. Sec 111001

6. Special depreciation allowance for qualified production property.

This provision allows taxpayers to immediately deduct 100 percent of the cost of certain new factories, certain improvements to existing factories, and certain other structures. Specifically, this provision allows taxpayers to deduct 100 percent of the adjusted basis of qualified production property in the year such property is placed in service. “Qualified production property” is defined as the portion of any nonresidential real property that meets the following requirements (among others).  Under current law, taxpayers are generally required to deduct the cost of nonresidential real property over a 39-year period. * Ways and Means Sec. 111101

7.  Increased dollar limitations for expensing of certain depreciable business assets.

This provision increases the maximum amount a taxpayer may expense under IRC section 179 to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million. The $2.5 million and $4 million amounts are adjusted for inflation for taxable years beginning after 2025. The proposal applies to property placed in service in taxable years beginning after December 31, 2024. Under current law (IRC section 179) a taxpayer may elect to expense the cost of qualifying property, rather than to recover such costs through tax depreciation deductions, subject to limitation. Under current law, the maximum amount a taxpayer may expense is $1 million of the cost of qualifying property placed in service for the taxable year. The $1 million amount is reduced by the amount by which the cost of such property placed in service during the taxable year exceeds $2.5 million. The $1 million and $2.5 million amounts are adjusted for inflation for taxable years beginning after 2018, and are $1.25 million and $3.13 million in 2025, respectively. * Ways and Means Sec. 111103

8.  Increase in threshold for requiring information reporting with respect to certain payees. (Independent contractors and subcontractors)

Current Law: Under current law, the reporting threshold for payments by a business for services performed by an independent contractor or subcontractor and for certain other payments is generally $600. In some cases, the reporting threshold is based on payments made during the taxable year. Provision: This provision generally increases the threshold to $2,000 and adjusts it for inflation for taxable year beginning after December 31, 2024. The new threshold is based on payments during the calendar year. This provision applies to payments made after December 31, 2024.  * Ways and Means Sec. 111105

9.  Exclusion of interest on loans secured by rural or agricultural real property.

This provision allows for a partial exclusion of interest on certain loans secured by rural or agricultural real estate. Specifically, it allows for the exclusion of 25 percent of interest received by a qualified lender on any qualified real estate loan.  

“Rural or agricultural real estate” means (1) any real property which is substantially used for the production of one or more agricultural products, (2) any real property which is substantially used in the trade or business of fishing or seafood processing, or (3) certain aquaculture facilities.

A “qualified real estate loan” means any loan that meets the following requirements: (1) the loan is secured by rural or agricultural real estate, or by a leasehold mortgage (with a status as a lien) on rural or agricultural real estate, (2) the loan is not made to certain foreign entities of concern, and (3) the loan is made after the date of enactment and before January 1, 2029.  * Ways and Means sec. 111107

10.  Modifications to low-income housing credit.

This provision makes three changes to the Low-Income Housing Tax Credit  (LIHTC) program. First, for calendar years 2026 through 2029, the “9% LIHTC” is restored to its 2021 level with a 12.5 percent allocation increase. Second, for the “4% LIHTC”, this provision lowers the bond-financing threshold to 25 percent for projects financed by bonds with an issue date before 2030. Last, this provision designates Indian and rural areas as "Difficult Development Areas" (DDAs)  * Ways and Means. Sec. 111109

* Committee on Ways and means BBB section by section - Chairman Jason Smith.  https://waysandmeans.house.gov/wp-content/uploads/2025/05/The-One-Big-Beautiful-Bill-Section-by-Section.pdf
** South Dakota Retainers Association summery. July 9, 2025