A new tax law just made permanent some of your biggest tax-saving tools and created fresh opportunities for agency owners.
Quick Summary: What Agency Owners Need to Know
Permanent Wins:
- 20% Pass-through deduction (QBI)
- 100% Bonus depreciation on business assets
- Section 179 limit raised to $2.5M
- Full expensing of domestic R&D
- 1099-NEC/MISC threshold raised to $2,000
Temporary Deductions:
- Up to $25K in deductible tips & overtime
- $10K deduction on U.S. auto loan interest
- SALT deduction cap raised to $40K (2025–2029)
Key Changes for Agency Owners
1. 199A Deduction Made Permanent
The 20% deduction for qualified business income (QBI) from S-corps, partnerships, and sole proprietorships is here to stay and with a wider income phase-out.
Example: If you take home $400,000 in 2025, you don’t pay tax on 20% of that income. That’s an $80,000 deduction – potentially saving you $30,000 or more in taxes depending on your state and bracket.
2. 100% Bonus Depreciation Returns
Starting in 2025, you can fully expense qualified new and used assets (think tech, furniture, equipment) in the year you buy them.
3. Section 179 Expensing Expanded
The limit jumps to $2.5 million (phasing out at $4 million) – great for agencies investing in infrastructure or software upgrades.
4. Time to Revisit the R&D Credit
Domestic research expenses can once again be fully deducted — no more 5-year amortization. Retroactive relief is available for qualifying expenses in 2022–2024.
5. QSBS Gain Exclusion Increased
Selling your agency? You may now exclude up to $15 million in capital gains under QSBS rules – and get partial exclusions after just 3 or 4 years.
6. 1099 Reporting Thresholds Raised
Starting in 2026:
- 1099-NEC/MISC: Raised from $600 → $2,000
- 1099-K: Back to $20,000/200 transactions.
- More breathing room for contractor-heavy agencies.
Individual Deductions Owners Should Know
Even if your agency is run through an entity, many of these personal deductions matter if you’re filing jointly or paying personal expenses through business earnings.
- Tips & Overtime Deduction: Deduct up to $25,000 in qualifying earnings
- Car Loan Interest (U.S. vehicles only): Deduct up to $10,000 in interest
- SALT Deduction Cap: Temporarily raised to $40,000 through 2029
- If you’re in a high tax state like NY or CA, this is a big deal.
What Should You Do Next?
This new law rewards proactive planning. Here’s what we recommend:
- Book a tax planning session to optimize your Q4 strategy.
- Evaluate major purchases or asset upgrades for early 2025.
- Review your exit or succession plan if a sale is on the horizon.
Let’s Make OBBB a Win for You
We’re already updating tax strategies for agency clients to take full advantage of the OBBB changes.
