Navigating the New Tax Law: What Small Businesses Need to Know
The Peoria Area Chamber of Commerce is committed to helping our local business community stay informed about the latest changes impacting operations and growth. To help business owners understand these updates, we’re sharing highlights from the U.S. Chamber of Commerce’s article Navigating the New Tax Law: What Small Businesses Need to Know and their accompanying Small Business Guide to the New Tax Law. These resources provide step-by-step insight into how you can maximize deductions, claim credits, and take advantage of new opportunities.
1. Permanently Claim the 20% Qualified Business Income (QBI) Deduction
Sole proprietors, partners, and S corporation shareholders can now permanently deduct 20% of qualified business income (QBI) on their federal tax returns each year. The law also introduces an inflation-adjusted minimum deduction—at least $400—for those with lower QBI deductions.
Action step: Work with your accountant to verify your eligibility and ensure you’re claiming the maximum deduction annually.
2. Deduct 100% of Qualifying Research & Experimental (R&E) Expenses
Businesses with domestic R&E spending—particularly those with average annual gross receipts under $31 million—can immediately deduct 100% of qualifying R&E expenses on their 2025 returns. This provision can even be applied retroactively for 2022–2024.
Action step: Review past tax filings with your advisor to identify possible refund opportunities.
3. Leverage Increased Section 179 Expensing
The maximum deduction under Section 179 has more than doubled, allowing small businesses to immediately expense up to $2.5 million in new equipment or software purchases. The phase-out threshold for total purchases now starts at $4 million, with both figures indexed for inflation beginning in 2026.
Action step: Consider accelerating or increasing capital purchases to take advantage of these new expensing limits.
4. Take Advantage of the Enhanced Qualified Small Business Stock (QSBS) Exclusion
Investors in qualifying small C corporations can now exclude even greater capital gains when selling or exchanging stock held for more than five years. The new law broadens the definition of qualifying corporations, creating more opportunity for local investors.
Action step: Consult a tax advisor when planning equity investments or evaluating QSBS eligibility.
5. Maximize the Employer-Provided Child Care Credit
Businesses that offer employee child care can now claim a tax credit of up to $500,000—or $600,000 for small businesses with gross receipts of $31 million or less. Eligible businesses can claim up to 50% of qualified expenses, making this a major incentive for supporting working parents.
Action step: Explore partnerships with nearby businesses or third-party providers to offer shared child care services.
Preparing for Tax Season—And Beyond
The new law allows businesses to claim benefits for expenses and purchases made as far back as January 20, 2025, so don’t wait until next year’s tax season to start planning.
Quick checklist:
- Confirm QBI deduction eligibility and amount.
- Identify and deduct all domestic R&E expenses.
- Maximize Section 179 expensing opportunities.
- Review QSBS eligibility for future investments.
- Assess child care benefits and claim enhanced credits.
Credit: This summary is based on resources provided by the U.S. Chamber of Commerce. To explore the full guide and detailed recommendations, visit uschamber.com/taxes.
At the Peoria Area Chamber of Commerce, we’re here to help you stay informed and confident as you navigate these changes. For local resources or connections to professional advisors, contact our team or join an upcoming Chamber event to stay engaged with peers and policy updates.