If you’re self-employed, running a side hustle, freelancing, or running your own business, there’s good news on the tax front.
The 2025 tax law brings several key updates that could help you keep more of what you earn—if you know how to use them correctly. From deductions to reporting changes, here’s what every entrepreneur should know.
1. The 20% QBI Deduction Is Now Permanent
Also known as the Section 199A deduction, this provision allows many small business owners to deduct up to 20% of their qualified business income.
Previously, this deduction was set to expire. But under the new law, it’s now permanent—meaning long-term savings for millions of pass-through entities like sole proprietorships, LLCs, and S corporations.
This is one of the most powerful deductions available to entrepreneurs, and its permanency is a huge win.
2. The IRS Walks Back the 1099-K Changes
Remember when the IRS announced it would start requiring platforms like Venmo, PayPal, and Etsy to send 1099-K forms for any income over $600?
That rule has officially been reversed.
Starting in 2025, you will only receive a 1099-K if you:
- Have over $20,000 in gross payments, and
- Complete 200+ transactions
This is a welcome rollback for small sellers and casual freelancers—but keep in mind: even if you don’t receive a 1099-K, you are still legally required to report your income. The IRS just might not get the form directly.
3. R&D Deductions Expanded and Simplified
If your business involves product development, software, innovation, or technical research, this next one is big.
The 2025 bill allows immediate expensing of research and development (R&D) costs, eliminating the need to amortize them over several years. Even better, this rule is retroactive to 2022—which means you may be able to revisit previous years and capture additional deductions.
If you're in tech, eCommerce, cosmetics, supplements, or any industry where research and formulation are part of your cost structure, this could lead to significant tax savings.
Get the Strategy Right—Or Risk Leaving Money on the Table
These changes are powerful when applied correctly—but costly if ignored. From entity structure to deduction planning and income reporting, your strategy matters more than ever.
If you're unsure how these updates apply to your business—or want help getting proactive with your 2025 tax plan—I’d love to help.
Email me at kim@kimberlybagleycpa.com or book a call with me here to make sure you’re on the right side of every tax opportunity.