The “One Big Beautiful Bill” (BBB), also referred to as H.R. 1, is a sweeping budget-reconciliation bill that proposes to extend many provisions of the 2017 Tax Cuts and Jobs Act, introduce new tax deductions, and impact small businesses, independent contractors, and Airbnb hosts. In this deep dive, I’ll explore where this bill stands, what’s contained within it, and what it means for small business.
What is the BBB??
The One Big Beautiful Bill is a budget reconciliation package championed by House Republicans, first introduced on May 20, 2025, and passed in the House by a razor-thin margin of 215‑214‑1. The bill aims to permanently extend most of the 2017 Trump-era tax cuts scheduled to expire in 2025, while also including several new and expanded provisions for small businesses, individuals, and other groups .
Where Does the Bill Stand Now?
After advancing through the House, the BBB remains under active consideration in the Senate. Senate Republicans are reviewing proposed changes—particularly on business tax breaks, clean energy credits, and Medicaid work requirements—to secure votes from key senators such as Rand Paul, Ron Johnson, and Rick Scott. Senate Majority Leader John Thune has indicated potential amendments before moving the bill to President Trump’s desk.
What’s in the Bill?
Below is an in-depth look at major tax provisions included in the BBB:
- QBI (Section 199A) Expansion
The Qualified Business Income deduction for pass-through entities is permanently raised from 20% to 23%, and its income thresholds have been adjusted upward. This benefits small businesses and independent contractors significantly. - Bonus Depreciation Restored
The bill reinstates 100% bonus depreciation for assets placed in service after January 19, 2025, until 2030 (or 2031 for certain long-production items like aircraft). This allows businesses to fully deduct capital investments in the first year - Increased Section 179 Limits
The expensing limit under Section 179 jumps from $1 million to $2.5 million, with a phase-out threshold rising to $4 million. This supports larger equipment purchases by small and mid-sized firms. - SALT Cap Raised
The SALT deduction cap increases from $10,000 to $40,000 for joint filers earning under $500,000 (with a phase-down above that), and becomes indexed annually - 1099 Threshold Increased
Reporting thresholds for 1099-MISC and 1099-NEC forms increase from $600 to $2,000, with inflation indexing beginning in 2027—reducing paperwork burdens. - R&D Expense Deduction
The bill restores full expensing for domestic research and development under Section 174 beginning in tax year 2025, though foreign R&D expenses remain capitalized over 15 years. - Standard Deductions and Child Credit
Standard deductions rise to $26,000 for married couples and $13,000 for singles (2025 amounts), with the child tax credit temporarily increased to $2,500 through 2028. - Clean Energy Credit Phase-Outs
The bill accelerates the expiration of several clean energy tax credits, including clean vehicle, energy efficient home improvements, and clean production credits.
Where Does the BBB Go From Here?
This bill has cleared the House and is now undergoing debate in the Senate, where amendments and revisions are expected.
Legislative Outlook
Senate GOP negotiations center on ensuring business-related tax benefits remain, while Congress balances fiscal responsibility. Senators Paul, Johnson, and Scott are reportedly seeking deeper spending cuts to support permanent tax expansions, while Senate Democrats led by Chuck Schumer have vowed to oppose the bill vigorously.
With such a contentious environment and only a slim Republican majority, every vote will count. Ultimately, the bill is very likely to pass, but what it could look a lot different by the time it gets to Trump’s desk if the dissenters get their way.
Potential Additions and Amendments
- Legitimizing Bonus Depreciation and R&D Deductions: While current language reinstates these temporarily, senators may push for permanence or extended phase-down timelines.
- Modifications to Medicaid Work Requirements: Earlier House versions proposed work mandates starting 2026; Senate debate may alter or soften these provisions.
- Clean Energy Credits Adjustments: Some senators may attempt to restore expired clean energy incentives or modify phase-out timelines.
- SALT Cap Tweaks: High-tax states may seek broader relief beyond the $40,000 limit.
- Additional Business Tax Relief: Possibilities include extending unemployment tax credits or payroll tax exemptions for small business owners.
What Could the BBB Mean for Small Businesses?
For small businesses, the One Big Beautiful Bill offers some potential relief, but it also carries long-term implications that deserve careful scrutiny. The most impactful change is the permanent extension and expansion of the Qualified Business Income (QBI) deduction, which would now allow eligible pass-through businesses to deduct up to 23% of their qualified income, up from 20%. This could lead to meaningful tax savings for sole proprietors, LLCs, S-corps, and partnerships — especially those who were previously approaching the income threshold where the QBI phase-out begins.
The increase in Section 179 limits is another key benefit. Businesses would be able to expense up to $2.5 million in qualifying equipment and property purchases immediately, reducing taxable income in the year of acquisition. Combined with the reinstated 100% bonus depreciation, this provision is aimed squarely at encouraging capital investment, even amid high interest rates and economic uncertainty.
However, there’s a catch: these deductions may accelerate the timeline for reaching phase-out limits and may complicate financial forecasting. Businesses will need to re-evaluate whether to lease or purchase, upgrade or repair — and how to structure depreciation schedules over time. Also, while lower tax bills are helpful, the bill does not address underlying problems like access to credit, health care costs, or inflationary wage pressures, which remain top concerns for many small firms.
Independent Contractors
The landscape for independent contractors is especially impacted by the proposed increase in the 1099 reporting threshold. Raising it from $600 to $2,000 may reduce the reporting burden and eliminate nuisance filings, especially for gig workers or casual side-income earners. But this also has implications for platforms like Uber, DoorDash, Fiverr, and Upwork, which currently generate millions of 1099s each year under the $600 rule. It’s likely that platforms will need to update compliance software and educate contractors on how the new thresholds apply — especially if different states keep lower thresholds in place.
Additionally, the improved QBI deduction and Section 179 expensing rules extend to independent contractors structured as sole proprietors or single-member LLCs. This means a freelance graphic designer, for instance, could deduct up to 23% of net income and write off the full cost of a new $2,000 computer — in the same year. But here again, increased deductions also increase the risk of audit if bookkeeping and substantiation aren’t airtight.
And while the bill favors tax cuts over compliance enforcement, it does not change the self-employment tax burden or provide any relief for high Schedule C earners who are still subject to Medicare surcharges or the 3.8% Net Investment Income Tax.
What Could It Mean for Airbnb Hosts?
Airbnb hosts, particularly those who report activity on Schedule C or Schedule E, are well-positioned to benefit — but also must tread carefully. The restoration of bonus depreciation would allow hosts to fully deduct the value of appliances, new furniture, security systems, and other eligible improvements made to their short-term rental property after January 19, 2025. That means a $12,000 investment in new furnishings could reduce this year’s tax bill by the full $12,000, rather than being spread over 5 or 7 years.
However, Airbnb hosts must still be mindful of personal vs. business use allocation rules. Bonus depreciation only applies to the business-use portion of a property. If a host uses their property for personal stays more than 14 days per year (or 10% of total rental days), they may fall under mixed-use property rules and face limitations on both depreciation and expense deductions.
There’s also no provision in the BBB that changes the passive activity loss rules — meaning losses from an Airbnb property still may not be deductible against active income unless the taxpayer qualifies as a real estate professional. The bill also does not update how short-term rentals are treated for purposes of self-employment tax — an ongoing gray area that the IRS has yet to clarify fully.
Our Advice to Clients
For now, our advice is to approach the One Big Beautiful Bill with both optimism and caution. If the Senate passes the bill in something close to its current form, many business owners and contractors will see real, measurable tax relief starting with the 2025 tax year. But it’s essential not to make assumptions before the bill clears both chambers — and even then, individual facts and circumstances matter greatly.
Here’s how we’re advising clients to prepare:
Start planning around the expanded QBI deduction
If your business structure is a sole proprietorship, S corporation, or partnership, now is the time to reassess whether you’re positioned to take full advantage of the proposed 23% deduction. That means keeping net income in the optimal range and considering whether changes to payroll, distributions, or ownership might affect eligibility.
Upgrade assets strategically
If bonus depreciation and Section 179 expensing limits are restored, significant tax savings could be available for capital investments made as soon as the bill is enacted. For Airbnb hosts and contractors alike, this means timing new purchases carefully and retaining receipts and documentation that substantiate 100% business use.
Reassess your 1099-MISC and 1099-K strategy
If you operate a platform business or hire freelancers regularly, you’ll need to update your reporting systems and internal thresholds. For contractors, fewer 1099s may mean more manual tracking of income — so be proactive about recordkeeping to ensure you’re reporting everything accurately and capturing all eligible deductions.
Run depreciation and recapture scenarios
Especially for Airbnb hosts and real estate investors, understanding the long-term implications of accelerated depreciation — and its potential recapture — is critical. We recommend modeling out various sale and conversion scenarios to get a clearer picture of what future liabilities might look like.
Stay flexible
The BBB is still a work in progress. Last-minute amendments, especially from the Senate, could shift some provisions significantly — including clawbacks, phaseouts, or sunset clauses. Tax planning this year will require flexibility and ongoing monitoring of legislative developments.
Closing Thoughts
The One Big Beautiful Bill is more than just a tax reform proposal — it’s a political litmus test, a policy experiment, and a rare moment of bipartisan curiosity in the modern tax landscape. While it promises real benefits for small businesses, independent contractors, and property owners who operate on platforms like Airbnb, the final version of the law may look very different than the House bill currently circulating.
And while the bill’s tone is optimistic and its marketing catchy, the deeper implications — from depreciation recapture to income thresholds to long-term compliance responsibilities — require serious attention. The tax code remains complex, and any time sweeping changes are proposed, they create both opportunity and risk.
We’ll continue to monitor the BBB closely and provide timely updates for our clients. In the meantime, take stock of your current deductions, consider what you might accelerate or delay in terms of purchases, and reach out to a tax professional to build a customized plan. At Shared Economy Tax, we specialize in helping clients maximize their tax savings by taking advantage of the latest tax breaks, credits, and strategies. We can help you prepare for the BBB and whatever business throws at you next. Get started today with a one-on-one strategy session to see how much you can save.
