Understanding Some of the Impact for Small Business
Oct 06, 2025
The new tax code that Congress passed on July 3rd of this year was 870 pages. I have some very strong feelings about healthcare changes and exploding national debt in order to fund deep tax cuts for the nation’s elite (rant over), but my objective here is to share the major up-coming changes that are relevant to you, the small business owner.
This newsletter is very quick, tax-dense and lacks the hilarity you’ve likely come to expect from this brand, because, well, the topic is tax code and I’m no miracle worker.
October Housekeeping
If you filed an extension for 2024 AND you’re a Sole Prop, Single member LLC or a C-Corp, your business filing is due on October 15th. Personal tax returns for anyone who filed an extension are also due on October 15th. This is the final major deadline for the year so show your tax pro some love and get your documents to them asap!
That Bill: Context
I’m NOT a tax pro. While I strive to offer tax prep in the future, I will never be the tax pro myself, specifically because these laws change so frequently – and they are actually LAWS (side note: why don’t tax pros get paid like attorneys, as they are advising on law?). SO, I sourced most of this information from Erica Goode of the Consultants and Money Podcast, episode 100. She is a Certified Public Accountant, a great resource, and her episodes are only 10-ish minutes long – the perfect amount if you’re not excited about tax law, but also strive to be informed about it.
2 Quick Tax definitions:
Tax Deduction: reduces your taxable income. A deduction will INDIRECTLY lower your tax bill.
Tax Credit: dollar-for-dollar reduction of your final tax bill.
For the same dollar amount, a tax credit is almost always worth more than a deduction.
That Bill: What’s Leaving
- SALT (State And Local Tax) Limitation: There is a limit on how much you can deduct for state and local income tax and property tax on your personal tax return. The old cap was $10k, the new cap is $40k.
- Residential Energy Tax Credits: This is a tax credit for things like a new HVAC or new windows that ends on 12/31/25.
- EV (Electric Vehicle) Tax Credit: This is a tax credit for Electric Vehicles that ends on 09/30/25.
That Bill: What’s Staying
- Higher standard deduction. Under the TCJA, standard deductions increased significantly – but temporarily. That bill makes the higher standard deduction permanent and will adjust for inflation each year going forward. Just like when the TCJA increased the standard deductions, this simplifies personal tax filing for many people because it’s often no longer worth it to itemize. Pre-TCJA 32% of households itemized; now only about 10% of households do.caption…
- Child Tax Credit: increases to $2200 per child. It starts to phase out over $400k for married filing jointly (no credit over $488k) and $200k for other filers (no credit over $244k), and will adjust for inflation moving forward
- QBI (Qualified Business Income): 20% deduction on business income that most LLCs and S-Corps are getting already. There are some complicated restrictions (including your total household income), so check in with your tax pro if you’re not sure how this affects you.
- Lower Tax rates: Lower tax rates for each tax bracket. These lower rates came into effect in 2017 and were going to expire at the end of this year. With this tax bill, they stay for the foreseeable future.For comparison:As a friendly reminder: your “tax bracket” is not the money you pay on your whole bundle of income. Tax brackets break your taxable income up into chunks. Every Single-filing taxpayer, whether it’s a Bill Gates divorced-billionaire type or a never-married nurse assistant working two jobs, only pays 10% on the first $11,925 of their income, and 12% on the next chunk from $11,926 to $48,475, 22% on the amount between $48,475 and $103,350, and so on. If you get a raise and your income goes over $103,350, you’re paying more taxes, but only on the amount of your raise that landed you in the 24% bracket – not on the whole pile of cash.
The Bill: What’s Brand New
- Charitable Deductions for Non-Itemizers: previously, you were required to itemize your return in order to take the charity deduction, but now even if you don’t itemize, you are allowed to deduct up to $1000 for single filers and $2000 married filing jointly. Keep your Salvation Army receipts and other non-profit receipts, you’ll need them now.
- Car Loan Interest Deduction: However, there are a lot of requirements! You definitely need to have a conversation about this with your tax pro, but it did not apply before so make sure you ask.
- Increased 1099 Threshold: this is my favorite!! The current payment threshold to send a 1099 to your vendors is $600, and that remains for 2025 (standby for the 1099 newsletter, coming soon), BUT for 2026, the threshold increases to $2000! This generally means you have to send substantially fewer 1099s in January 2027.
This is certainly not an exhaustive list; that bill was 870 pages. However, these are things that are most likely to affect the majority of people reading this.
If you have follow up questions about tax law, you can contact me for a referral to a tax pro, ‘cuz this is as far as I can take you on the tax code journey. But if you have any questions about how to record charitable donations, how to file a 1099 or any tax-adjacent questions about accounting/bookkeeping, hop on my calendar for a free call.
IQBK Client Highlight
Mission Mappers
Meet Christine Davis, founder of Mission Mappers. Christine partners with small businesses, start-ups and nonprofits in need of senior-level operational leadership but aren’t ready for a full-time executive. She steps in on a fractional or interim basis to help organizations scale, create operational efficiency and tackle special projects.
Through her Operational Wellness Check, Christine quickly identifies what’s working, what’s not and where systems or processes can be streamlined. She then works alongside teams to design solutions—from standard operating procedures to new processes—that make day-to-day operations smoother and more sustainable.
What sets Christine apart is her people-centered approach. She leads change with thoughtfulness, clarity and calm, making complex challenges feel manageable and progress achievable.
You can reach Christine at: christine@missionmappersllc.com
For more info: missionmappersllc.com
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