This April 15 marks the first Tax Day since Congress passed and President Trump signed the One Big Beautiful Bill Act (OBBBA), a sweeping tax cut package that includes key priorities championed by IFA to deliver critical tax relief for America’s 832,000 franchise small businesses.

Passage of this legislation was a key priority for IFA’s advocacy efforts last year. With its provisions already taking hold in tax year 2025, here’s how this bill is helping the franchise community:

The 20% Pass-Through Deduction Is Here to Stay

By permanently extending the Section 199A qualified business income deduction, franchisees operating as S corps, partnerships, or sole proprietors have continued benefitting from a 20% deduction on qualified business income — and the income thresholds for phase-outs have been expanded.

“Local businesses like mine rely on the passthrough deduction to reinvest in our operations, create jobs, and support local economies. The 199A tax deduction has been a lifeline, enabling me to keep and invest in my business, driving growth and innovation, while the extra financial breathing room has allowed me to hire more employees and provide better benefits to existing team members.” –Jerry Akers, Great Clips and The Joint Chiropractic franchisee, Palo, Iowa

100% Bonus Depreciation Made Permanent

Franchisees can permanently expense 100% of qualified property in the year placed in service. This provision accelerates tax deductions, lowers current-year taxable income, and encourages capital investment in equipment, machinery, and qualifying improvements

Estate Tax Exemption Doubled and Indexed

The OBBBA made 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. 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.

No Tax on Tips and Overtime

The No Tax of Tips provision provides an above-the-line deduction of up to $25,000 for qualified tips received by both W-2 employees and 1099 contractors, phasing out at modified AGIs above $150,000 if filed individually or $300,000 jointly. The No Tax on Overtime provision lets workers deduct up to $12,500 (or $25,000 for joint filers) of overtime pay on their 2025–2028 returns, regardless of itemization.

“As a proud multi-unit franchise owner at Healthy Living Ventures, I’ve seen first-hand how No Tax on Tips is putting real money back into the pockets of our hardworking team members,” said Evans, who also chairs IFA’s Black Franchise Leadership Council. “This policy recognizes the dedication of our employees in delivering exceptional service and allows them to keep more of what they earn, boosting not only financial security but also morale. I encourage every tipped worker on our team to take full advantage of this important relief—it’s a gamechanger for those who make our business thrive, and I thank the policymakers who made it all possible.”

Above all, last year’s tax bill provided stability that the business community and its leaders crave from their elected officials. By making these provisions permanent, entrepreneurs can plan that lasts beyond any presidential term.

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