President Trump signed new tax legislation into law on the afternoon of July 4. A summary of the key provisions impacting business owners contemplating an ownership transition transaction are below:
| Tax Code Section / Topic | Legislative Change | Tax Strategy / Outcome |
| IRC §1202 Qualified Small Business Stock (QSBS) | Tiered gain exclusionPer-issuer gain exclusion cap increased from $10M to $15M and adjusted for inflation starting in 2027Enhanced aggregate gross assets threshold increased from $50M to $75M. | There is a greater benefit to more small business shareholders with the corporate tax rate remaining low and expanded benefits of §1202. |
| IRC §2010(c) Estate and Gift Tax Lifetime Exclusion Amount | Increase in the exclusion amount to $15M for 2026 and indexed to increase relative to inflation annually thereafter. | The amount an individual can give away during their lifetime without paying estate or gift taxes increases to $15 million. |
| IRC §163(j) Business Interest Deduction | Modifies the calculation by reinstating the EBITDA-based limitation for beginning in 2025. The calculation of adjusted taxable income (ATI) for the interest deduction will include addbacks for depreciation, amortization, and depletion. | The amount of deductible business interest expense is increased. |
| IRC § 179 Expensing & §168(k) Bonus Depreciation | Revisions to section 179 increase the maximum amount a taxpayer may expense to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million. 100% Bonus Depreciation is reinstated and made permanent. Businesses may immediately deduct 100% of the cost of eligible business property placed in service on or after January 19, 2025. | These expanded and permanent expensing and bonus depreciation provisions are powerful tools for businesses to deduct the cost of qualifying assets upfront, encouraging investment. These provisions may be particularly beneficial for businesses in manufacturing, agriculture, and real estate operations. |
| IRC §199(A) Qualified Business Income | The 199A (QBI) deduction is now permanent and keeps the deduction rate at 20% with increased phase-in limits and a minimum deduction amount. | The deduction is now permanent and more accessible to pass-through entities. |
Click here for the full text of the legislation
If you’re a business owner and curious how this legislation may impact your ownership transition plan and want to have a confidential conversation, please reach out to Ed Kirk or John O’Dore.
