By the International Franchise Association (IFA)

On July 4, President Trump signed into law the “One Big Beautiful Bill” Act (OBBBA) — a sweeping tax relief package and a major win for franchise businesses across the country.

After months of advocacy, debate, and support from the franchise community, the legislation passed through Congress and was signed into law with the potential to significantly strengthen the long-term outlook for America’s 831,000 franchised small businesses.

Here are 5 key takeaways every franchisee needs to know about what this bill means for your business:

1. The 20% Pass-Through Deduction Is Here to Stay

The bill permanently extends the Section 199A qualified business income deduction, a vital tax benefit that was set to expire after 2025. Franchisees operating as S corps, partnerships, or sole proprietors will continue to benefit from a 20% deduction on qualified business income — and the income thresholds for phase-outs have been expanded. A new $400 minimum deduction has also been added for small business owners with at least $1,000 of qualified business income.

Why it matters: This provision keeps more capital in your business, supporting reinvestment and growth.

 

2. 100% Bonus Depreciation Made Permanent

Franchisees can now permanently expense 100% of qualified property in the year it’s placed in service. This applies to everything from equipment to leasehold improvements, and provides significant tax planning flexibility when opening or upgrading units.

Why it matters: This is a powerful tool for multi-unit expansion and remodels, giving you more control over your tax obligations.

 

3. Estate Tax Exemption Doubled and Indexed

The bill makes the enhanced estate and lifetime gift tax exemption permanent, increasing it to $15 million per individual (or $30 million for married couples) starting in 2026 and indexing it for inflation.

Why it matters: Franchisees planning for succession and generational wealth transfer now have long-term certainty and a significantly higher exemption threshold helping businesses stay within the family without the threat of unworkable tax penalties passed on to the next generation.

 

4. New Deductions for Tips and Overtime

For the first time, franchise employees and independent contractors in tipped or overtime-eligible roles may deduct those earnings above the line, with a deduction of up to $25,000 for tips and $12,500 for overtime ($25,000 for joint filers). These deductions are available from 2025 through 2028.

Why it matters: This provides an added incentive for hiring and retaining employees, particularly in hospitality, beauty, and personal services industries.

 

5. Franchisee Advocacy Made This Happen

This historic legislation didn’t happen by chance. It was the result of relentless advocacy from IFA and franchisees across the country. From hundreds of franchisees attending the 2024 IFA Advocacy Summit, to dozens of Capitol Hill meetings, field hearings, and in-district visits, the franchise community showed up in force:

– 9 franchisees joined us at the White House
– 4 testified before Congress
– 3 field hearings brought franchisee stories directly to lawmakers
– Hundreds of franchise advocates meeting with their representatives on Capitol Hill

Why it matters: This victory is proof that when franchisees engage, franchising wins.

 

The “One Big, Beautiful Bill” is more than just tax relief — it’s a platform for long-term growth, smarter reinvestment, and a stronger franchising future.

What’s Next?  We’re encouraging everyone in our franchising community to join us this September at the 2025 IFA Advocacy Summit – a perfect opportunity to connect with lawmakers to share your perspective on the legislation, say thank you and help advocate for the Franchising Bill, which will eliminate the joint employer uncertainty.  We hope you’ll join us in Washington DC, September 15-17.

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