Did you know that Keeneland had a record-breaking horse sale last fall? Over half a billion dollars was spent in a single September auction. As a financial advisor in Lexington, Kentucky, I think I know why. When someone drops $1 million on a thoroughbred yearling, they are not just buying a horse. They are buying a tax deduction. And that deduction just got a lot more powerful.

The One Big Beautiful Bill Act made three significant changes for business owners, sole proprietors, and the self-employed. This episode covers all three.

This is week five of our OBBBA series on The Groundwork.

WHAT YOU'LL LEARN

100% Bonus Depreciation

•      100% bonus depreciation has been restored and made permanent for qualified property placed in service on or after January 20, 2025

•      Under the old rules from 2017, bonus depreciation was already down to 40% in 2025 and scheduled to reach zero by 2027. That has been fully reversed.

•      Eligible property includes business vehicles, equipment, machinery, certain building improvements, software, and more

•      The planning question: take the full deduction this year, or spread it out based on where your income is headed? That is a strategic decision, not a default.

•      Unlike Section 179, bonus depreciation can create a business loss, which opens additional planning options

Section 179

•      The Section 179 deduction limit has doubled, from $1.25 million to $2.5 million per year

•      The phase-out threshold has increased from $3.13 million to $4 million, meaning more businesses can use it before it starts to disappear

•      The key distinction: Section 179 is limited to your taxable income. You cannot use it to create a loss.

•      Sequencing matters: bonus depreciation first if you want a potential loss carryforward; Section 179 if you want to shelter income you already have

QBI Deduction

•      The Qualified Business Income deduction allowed qualifying business owners to deduct 20% of their net business income. It was set to expire at the end of 2025. It is now permanent.

•      Applies to sole proprietors, S-corps, partnerships, and LLCs taxed as pass-through entities

•      The phase-out for Specified Service Trades or Businesses still applies, starting at $394,000 in taxable income for married filers

•      The bill widened the phase-in range, giving more mid-income business owners access to the full deduction

•      If you have been taking this deduction, it is now locked in. If you were not taking it and own a qualifying business, it is a conversation worth having with your CPA.

Own a business, work for yourself, or been thinking about starting something? These changes are worth a real conversation.

Whether you are a business owner in Lexington, self-employed anywhere in Central Kentucky, or have been thinking about starting something, I would be glad and honored to sit down with you and walk through what these changes mean for your specific situation.