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With nearly 900 pages and more than 100 tax-related provisions, H.R.1, the One Big Beautiful Bill Act<\/a>, which was signed into law on July 4, 2025, has several important changes for small businesses to navigate. Payroll, employment tax and employee benefit changes are among the law\u2019s key provisions, with some retroactively effective as of Jan. 1, 2025.<\/p>\n While the Department of the Treasury and the IRS are expected to provide further guidance on implementing certain provisions, there are steps small businesses can take now to prepare for potential impacts.<\/p>\n For small businesses competing for talent, a comprehensive benefits strategy<\/a> can help and often goes a long way in making employees feel valued. ADP\u2019s latest benefits sentiment data shows that 78% of employees say they feel valued by their employer due to the medical benefits that are offered, while an even higher percentage (82%) feel valued by the non-medical benefits their employer provides. As you look for opportunities to extend employee benefits, consider the following changes:<\/p>\n Related: 20 Tax Deductions Online Businesses Can Take to Save Thousands<\/a><\/b><\/p>\n As small businesses look for ways to increase agility and differentiate the products and services they offer customers, there are opportunities to help offset the costs associated with research and development<\/a> (R&D).<\/p>\n Small businesses (with average annual gross receipts of $31 million or less) will generally be able to retroactively expense domestic R&D costs made after Dec 31, 2021. The retroactive deductions can also be taken as a catch-up deduction in 2025, spread over the 2025 and 2026 tax years, or the business can file amended tax returns for the applicable years. To qualify, the amendments must be filed before July 4, 2026. The Act also includes rules to coordinate the immediate deductibility of R&D costs with the federal research and development tax credit.<\/p>\n In addition to changes to business tax, there are some key personal income tax provisions in the Act that can impact payroll and withholdings. Small businesses should prepare for the following changes, which may affect record-keeping and require communication with employees:<\/p>\n To help with any recordkeeping<\/a> challenges, the Act provides a transition rule allowing for reasonable accounting measures to calculate eligible deductions for 2025. Due to the retroactive adoption of these deductions for 2025, the Department of the Treasury has released guidance providing that employers and payors are not required to provide employees and payees with estimates of qualified overtime and cash tips for 2025, but are encouraged to do so.<\/p>\n Separate guidance was issued in late November to assist individual taxpayers in estimating their deductions for 2025 by describing how they could use employment-related documents, such as pay statements and IRS forms, to derive their amounts of deductible overtime and tips if that information is not provided by their employer or payor Treasury and IRS are also expected to release finalized guidance on tipped occupations and qualified tips, as well as guidance to employers and payors for supporting these deductions for 2026-28.<\/p>\n Related: Switching to a C Corp Could Save Your Business Thousands \u2014 Here\u2019s How<\/a><\/b><\/p>\n Staying on top of complex regulatory changes<\/a> requires both proactive monitoring and reliable support. Accountants and trusted service providers can help interpret new regulations, provide guidance on appropriate actions and help identify relevant tax credit opportunities that might benefit your business.<\/p>\n As further guidance is issued for H.R.1, and as with all tax matters, work with your trusted tax advisors to stay on top of new requirements specific to your business. Having technology in place that monitors regulatory updates and integrates changes directly into payroll and HR workflows can help reduce risk and enable continuity as well.<\/p>\n With small business owners often pulled in many directions, building a strong support system \u2014 from the solutions you leverage to the advisors you engage \u2014 can help you stay focused on strategy and business growth.<\/p>\n<\/p><\/div>\n With nearly 900 pages and more than 100 tax-related provisions, H.R.1, the One Big Beautiful Bill Act<\/a>, which was signed into law on July 4, 2025, has several important changes for small businesses to navigate. Payroll, employment tax and employee benefit changes are among the law\u2019s key provisions, with some retroactively effective as of Jan. 1, 2025.<\/p>\n While the Department of the Treasury and the IRS are expected to provide further guidance on implementing certain provisions, there are steps small businesses can take now to prepare for potential impacts.<\/p>\n<\/p><\/div>\nTax credits for benefits offerings<\/h2>\n
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Opportunities to offset R&D costs<\/h2>\n
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Prepare for income tax changes<\/h2>\n
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Stay focused on business growth<\/h2>\n
Key Takeaways<\/h2>\n
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