What to Expect from the New Administration’s Tax Policies in 2025: A Guide for Small Business Owners

With a new administration in place, small business owners now have a clearer picture of what to expect in terms of tax policy changes for 2025. These updates are packed with opportunities to save, invest, and grow, from 100% bonus depreciation to the removal of the SALT deduction cap. 

Here, we’ll break down what’s new, how it can benefit your business, and the best steps to take to make the most of it.

*As a CPA and tax attorney with over 25 years of experience working closely with small business owners, I’m here to provide you with actionable insights on the incoming tax policies, so you can make confident decisions about investing, expanding, and saving on your taxes in 2025.

2025: Key Changes in Tax Policies for Small Businesses

The new administration is rolling out tax policy updates, and many are especially helpful for business owners. Here’s a rundown of the main 2025 tax policy changes and practical ways you can benefit from each.

Tax Rates Remain Steady in 2025

One of the biggest pieces of news? Tax rates are staying put. With no increases across any income brackets, this stability gives you a firm foundation to budget, reinvest, and grow without worrying about higher tax rates eating into your income.

Why Steady Tax Rates Matter for Business Owners

Knowing tax rates will hold steady allows you to plan your 2025 budget with confidence. Whether you’re looking to reinvest in your business, expand, or make some large purchases, stable tax rates mean fewer surprises and more room for long-term growth.

Increased Standard Deductions for Individuals and Couples

Here’s more good news: the standard deduction has gone up for 2025:

• Individuals: $14,600, up from $13,850 in 2024
• Married Couples Filing Jointly: $29,200, up from $27,700 in 2024

These increases mean you can reduce your taxable income right from the start, allowing you to keep more of your earnings.

Maximizing the New Standard Deduction Limits

With a higher standard deduction, you might also be able to qualify for additional tax credits, which could further lower your tax bill. For small business owners, this can mean offsetting some of your income and redirecting those savings back into your business or into personal investments.

Removal of the SALT Deduction Cap

The SALT (State and Local Tax) deduction cap has been removed, a big change from the previous $10,000 limit under the 2017 Tax Cuts and Jobs Act. For those in states with higher taxes, like New York, California, and New Jersey, this is a big win, as it allows you to deduct more on federal taxes.

Why This Change Matters for High-Tax States

If you operate in a state with high taxes, lifting the SALT cap could mean thousands of dollars in potential savings. This new flexibility makes it a great time to review your tax planning and see where you can maximize this benefit.

Return of 100% Bonus Depreciation

One of the most valuable changes in the 2025 tax policy is the return of 100% bonus depreciation. This means you can write off the full cost of eligible property and equipment in the year of purchase, rather than over several years. This deduction applies to:

• Computers and office equipment
• Vehicles and machinery
• Manufacturing and construction equipment

How to Maximize 100% Bonus Depreciation for Your Business

For business owners considering upgrades, expansions, or major purchases, 2025 is a prime year to do it. This deduction can immediately reduce your taxable income, keeping more cash in your business for growth and reinvestment.

Expansion of the Qualified Business Income (QBI) Deduction

The 20% Qualified Business Income (QBI) deduction introduced in the 2017 Tax Cuts and Jobs Act continues in 2025. This deduction allows eligible small business owners to reduce their taxable income by 20%, meaning less tax on business profits.

Who Qualifies and How to Use the QBI Deduction

If you’re a sole proprietor, part of an LLC, or running an S Corporation, you likely qualify for this deduction. Making sure your business is structured properly for QBI eligibility can provide a substantial tax break, putting more money in your pocket.

New Exemptions for Social Security, Tips, and Overtime

For 2025, the IRS is adding tax exemptions for Social Security income, tips, and overtime pay. This means you get to keep more of what you earn without additional taxes on these types of income.

Why These Exemptions Matter

For many who rely on Social Security, tips, or overtime income, these exemptions provide welcome relief. With more money in your pocket, you can put those savings toward building your business, investing, or personal savings goals.

Higher Deduction for Small Business Start-Up Costs

New entrepreneurs have something extra to celebrate: the start-up cost deduction limit has increased to $50,000, up from the previous $5,000. This adjustment covers initial business costs, such as equipment, marketing, legal fees, and accounting.

How the Increased Start-Up Deduction Helps New Businesses

This new limit provides a strong financial base, making it easier to launch a business with fewer upfront tax liabilities. It’s a valuable benefit for those starting fresh in 2025, as it helps offset the cost of getting your business off the ground.

How Small Business Owners Can Take Action in 2025

With these new small business tax deductions for 2025, you’re in a great position to benefit. Here are a few practical steps to help you leverage the new tax policy changes effectively:

Reassess Your Budget

Planning to expand or make big purchases? With steady tax rates and 100% bonus depreciation, 2025 is a smart time to invest in your business without worrying about a tax surprise.

Evaluate Your Business Structure

Take advantage of the QBI deduction and other benefits by ensuring that your business structure supports them. Consult with a tax professional to make sure you’re set up to maximize all available deductions and credits.

Plan Large Purchases in 2025

If you’re eyeing new equipment, technology, or property, the return of bonus depreciation means you can make these investments with an immediate tax benefit. Timing these expenses strategically can yield significant savings.

Meet with a Financial Advisor or Tax Pro

Navigating new tax policies is easier with expert guidance. A tax advisor can help ensure you’re maximizing deductions and credits. The Main Street Tax Pro Network connects you with professionals specialized in small business tax strategies under the new laws.

Looking Ahead: Plan for Success with the 2025 Tax Policies

The 2025 tax policy changes bring new ways to grow your business, improve cash flow, and keep more of what you earn. By planning early and making strategic decisions, you can make the most of these benefits to strengthen your financial foundation.

With careful planning, these policies can help you reduce taxes, boost cash flow, and build a more secure future. Start preparing now to maximize these new tax advantages and set your business up for success in 2025 and beyond.