Back in March, I wrote about areas to watch in the 2025 tax bill. Now that the House is pulling all-nighters, the bill is real enough to consider how it might impact you as a self-funded business owner. 

Please note this is not the law yet. The House leadership is pushing for a vote by May 26, which is why I’m evaluating the proposed impacts now. This summary is background for conversations with your personal tax advisor. 

I’ve assumed that your business is organized as a passthrough entity -- sole proprietorship, partnership, S-corp, or LLC taxed as one of these -- and that all the owners of your company work in the business.

The likely positives: 

Individual rates: The top marginal federal tax rate will be held at 37%, and capital gains taxes will remain at 20% for short-term and 12% for long-term. With a passthrough designation, your corporate tax rate is variable, based on your household income. Households with $300,000 or more in adjusted gross income (AGI) will pay lower marginal rates on their income from $300,000 - $700,000. From $150,000 - $300,000, it’s highly dependent on your circumstances. Below $150,000, while you may appear to get a small tax cut, the loss of deductions and benefits may create an effectively higher tax rate. 

Qualified Business Income (QBI): The largest benefit for most of us. Eligibility for QBI is being expanded to sole proprietors and partnerships. The first 23% of your passthrough business profits will not be subject to income tax (up from 20%). As long as your side hustle income clears the minimum standard deduction ($26,000 for joint, $19,500 for head of household, $13,000 for single), you’ll get this business tax break.

SALT tax provision: This provision is one of the key bargaining chips to winning enough votes to pass the bill. The state and local tax (SALT) deduction was added in 2017 with a $10,000 deduction cap. This effectively increased income taxes for homeowners in higher tax areas. As of Wednesday morning, the SALT limit is proposed to be raised to $40,000 for individuals with $500,000 of income or less. This limit may not impact you if your accountant opted you into a SALT cap workaround through your business. But the workaround may not be necessary once the cap is raised, and will provide relief in places like New York City where S-corp registration is not recognized. 

Corporate tax rate: At profitability above $250,000, it may be appealing to convert your business to a C-corporation to take advantage of the proposed 12-15% corporate tax rate. This one requires both a strong financial outlook for your business and lots of consultation with a CPA or tax attorney, because owning a C-corp is a regulatory pain in the ass.

Estate tax: While I personally plan to remain above ground past 2030, the estate tax maximum might help you if you plan to sell your company or land in the next few years. The estate tax allowance will go up to $30 million for couples, $15 million for singles through 2029. The higher lifetime maximum allows you to give money away now to bypass future tax. The prime example is passing down a family business. I don’t get as amped up about this one because 1) the allowance was already $14 million, 2) most of us don’t plan to die on a schedule and 3) once you’re this asset heavy, you work around this with a trusts and estates attorney and a life insurance policy. However, if you’re in the gifting mood and this newsletter helped you gain your windfall, I will happily accept your generosity. 

Tax on tips: If you are in a business where tips are customary, the elimination of tax on tipped cash income up to $25,000 for total income under $160,000 may save you some payroll taxes. This provision is written to exclude tip compensation for beneficial business owners, but I have faith that the accounting community will find a way. 

Now, for the things that may not be good for you:

Individual tax rates: At an AGI of $60,000 - $150,000, you may be at a higher effective tax rate from broader marginal tax bands and less eligibility for credits and deductions. 

Health subsidy decrease: This one will hurt a lot of us. If you’re on an exchange / ACA or SHOP plan, your subsidy is going away. Fun fact, the Obama administration used Medicaid expansion to fund ACA subsidies, and Medicaid is being heavily cut. (This CBO estimate is about $715 billion.) If your household AGI is $28,000 - $140,000, anticipate that you’ll pay your full health insurance costs next year. And we should all expect our premiums to go up by 15-20% in 2026. As many as 8 million people could choose to go without health insurance. Shrinking the pool of participants will cause everyone’s individual premiums to go up.

Less SBA assistance: The budget cuts overall available loan assistance and increases collections of lapsed or delinquent EIDL and student loans. 

Higher borrowing costs: This one’s hidden and impacts everyone. The estimated impact of these tax cuts on the national deficit over the next five years is over $5 trillion. America relies on cheap debt to prop up our economic growth. In anticipation of this bill, the ratings agency Moody’s downgraded the US government’s debt rating last week, and there has already been lower demand for new 20-year Treasury bonds. Other governments and institutions are doubting our ability to pay back our debts, which means interest rates go up. And with consumer and business lending rates pegged to treasuries, you’ll be paying a lot more in interest. 

Continuing the 2017 cuts adds $3.3 trillion to the federal deficit, bringing our total debt load to 118% of GDP, approximately where the US was at the end of World War II. Adding the new cuts adds another $2.2 trillion would bring us to 125%, almost certainly forcing us into austerity programs from 2030 and beyond.

Remember when I said you have four years to get your bag? The clock has started. If you can claw into the top 5% of US earners, somewhere north of $250,000 a year in profits, you might not feel like you’re getting ahead, but you are. 

Don’t get me wrong, in this tax environment, I’d rather be a business owner than a W-2 employee. But the reality is 86% of US businesses have revenue under $100,000 annually. Combined with tariffs and higher operating costs, this bill will punch an express ticket to the struggle bus for many small business owners and the communities that buy from us.

The bill has many nuanced provisions, especially if you own business real estate. The legal pros at Proskauer are keeping up a very detailed summary. You can also follow the nonpartisan Congressional Budget Office’s scoring of each iteration of the tax bill. 

Again, this bill is not yet the law. It still needs to pass the House and Senate and satisfy the President. So what can you do?

• Keep your eye on this legislation. If you have opinions, contact your House and Senate representatives. 

• Clean up your business financials, know your eligible deductions, and keep good monthly records. 

• Evaluate your gross margins and consider bumping them up to cover higher costs coming in the second half of the year. Have a 2025 strategy and forecast.

• If growing your business is viable, explore what it would take. Book a free Strategy Session with me if you’d like to discuss it. 

• Check in with your tax advisor.

If you're applying for an SBA 7(a) or 504 loan after June 1, heads up: requirements have changed for 2025.

Birth Dates in E-Tran: As of March 27, lenders must enter each owner’s date of birth into the SBA’s loan system. This isn’t on the forms yet—so expect to be asked manually.

Ownership Documentation: Lenders are now required to confirm 100% of the business is owned by U.S. citizens or lawful permanent residents. Be ready to submit supporting ID and documents for all owners.

Guarantee Fees Are Back: After a temporary pause, SBA 7(a) loan fees have returned, with additional fees for short-term loans. 

Stricter Environmental Review: For real estate loans, lenders must now verify the property is free from contamination—or follow extra steps if it’s not.

If an SBA loan is on your 2025 roadmap:

• Prepare personal ID and ownership docs early

• Expect more thorough environmental checks

• Factor higher fees and interest rates into your financial plan

These changes aren’t dealbreakers—but they will slow you down if you’re not ready. Read all the provisions here. 

SEO shakeup. Search engine optimization (SEO) and content marketing via Google have been fairly reliable and cost-effective lead generation investments for almost 20 years. This week, Google rolled out AI Mode, a chatbot search product. This announcement fundamentally changes the rules for discovery. If you rely on the Google ecosystem for customers, lead generation, or ad revenue, dig into the announcements from the Google I/O conference. This may also interest you if you use Google Workspace, which added a pile of features.

Bore me, please. Want to join the “stealthy wealthy”? Boring businesses are where it’s at. The WSJ reports that owning unsexy self-funded businesses making $15 to $50 million are quietly becoming the desirable path toward personal wealth. I see they got my newsletter.

Cutting back? You may have noticed that friends are being more direct about not wanting to spend on brunches and trips. I am absolutely clear that paying $17 for a glass of wine means we have wine at home. The “loud budgeting” trend means holding your boundaries and stating openly when something is beyond your means. Average savings? About $18,000 a year.