Ryan Vaughn breaks down three provisions of the new tax package: the QBI deduction lets business owners deduct up to 20% of qualified profit, bonus depreciation lets you write off more equipment costs upfront, and new rules exempt up to $25,000 of tips from federal tax.
You know a bill is going to be a mess when it has a nickname that sounds like the Miss America pageant. They're calling it the One Big Beautiful Bill. It's also roughly 900 pages, which means 2 things can be true at once. One, there might be some real opportunities in there. And 2, most people talking about it have not read it cover to cover, including whatever politician you voted for. I'm not going to pretend that I read the whole thing. But at Insight, we did read through the sections that we feel business owners should be paying attention to. And yes, this is general education, not tax advice. Your situation is your situation. So always seek out direct conversations with a professional about your situation. All right, 3 things. QBI. This is the deduction that rewards profit. QBI, or qualified business income, is one of the weirdest parts of the tax code. Because it does not require you to buy something to get a benefit. Most deductions work like this: spend money, get a write-off. QBI works like this: make qualified profit, potentially deduct up to 20% of it. That means you can shield up to 20% of your profit without spending a dime. It's basically free money just for being a business owner. So here's the question for your CPA: how does QBI apply to my entity type and income level, and are there planning moves I should make this year To maximize it. If you want a simple checklist of the questions to bring to your CPA after you watch this, comment checklist and my team will send it to you. No pressure, it just saves you from playing memory games later. Second thing, bonus depreciation. If you buy equipment, a vehicle, software, certain improvements, things that will help you produce, tax law decides how fast you get to deduct that cost. Even if you paid for a piece of equipment in cash, Normal depreciation rules say you can't take all of that as a tax deduction right away. Bonus depreciation allows you to take a lot more than the normal depreciation rules, and the big beautiful bill updated the percentages to let you get a lot larger tax break in the year you buy that equipment. So if you're planning to invest in assets anyway, this could influence when you buy and when you place the asset into service. So here's the question for your CPA: if we invest in equipment or vehicles this year, what is the most tax-efficient timing and what qualifies based on the current rules and whatever is most likely to change? Okay, number 3: tips and overtime. Boy, this is the headline it feels like everyone's yelling about. This is one that the internet loves because it sounds simple. Tax-free tips, tax-free overtime. Look, whenever something sounds that clean, your next assumption should be, well, what's the catch? How's the government trying to screw me? This is a federal income tax deduction. Only a few states have adopted this so far, so don't be shocked if your state still taxes you on the tips and the overtime. The no tax on tips is up to $25,000, and the no tax on overtime is pretty darn nuanced. The simple gist is it's No tax on the premium amount of your overtime above your regular rate. The takeaway for business owners is simple: payroll and reporting matter more now, and you want your CPA and payroll provider confirming what counts and what gets reported and how your team is going to claim it correctly. So here's a question for your CPA: if tips or overtime get a tax change, what would that mean for our payroll setup, our compliance, and our compensation strategy? Look, knowledge is great, but execution is what's going to save you money. So don't wait until April. Get our free breakdown on our blog to get all the details. And if you want more videos like this that focus on what actually impacts your bottom line, subscribe. Also, friendly reminder, the IRS is not your friend, so plan accordingly.
