What’s in the 2025 Big Beautiful Bill for Freelancers and Self-Employed?
The ‘don’t blame me’ blurb: I am not a financial advisor, portfolio manager, or accountant. This is not tax or investment advice; it’s educational information to get you going. Please consult your trusty professional and do your due diligence. Carry-on!
It’s an expansive bill. These are the highlights for us freelancers and the self-employed.
👉 Some of these provisions expire in 2028; however, as we have seen with the 2017 Trump tax cuts, which have just been extended, politicians are loath to remove them.
199A Pass-Through Small Business Deduction
The deduction increases from 20% → 23% for many freelancers, sole proprietors, S-corps.
100% Bonus Depreciation Extended
Deduct 100% of the purchased equipment/software in year 1 instead of depreciating the cost over multiple years. Must be placed in service on or after January 19, 2025.
SALT Deduction Cap Raised
Deduct up to $40k of state/local tax from your federal tax return, up from $10k. Cutoff at $500k income threshold. Expires 2030.
Me: This is probably my most significant tax saving. My federal marginal tax rate is 35%. The extra $30k deduction could mean I pay $10,500 less tax. Read about how your tax rates work here.
No Tax On Tips
Deduct up to $25k for tip income. For certain occupations, the limit is reduced to $150k (single) or $300k (married). Expires 2028.
No Tax On Overtime
Deduct up to $12.5k (single) or $25k (married). Reduces at $150k (single) or $300k (married). Expires 2028.
Car Loan Deduction
Deduct up to $10k for car loan interest. Reduces at $100k (single) or $200k (married). The vehicle must weigh less than 14,000 pounds and be assembled in the United States. It covers purchases made in 2025 through 2028, and expires in 2028.
1099-K Limit Rises from $600 to $20k
eBay, PayPal, Venmo, etc, don’t report until $20k AND 200 transactions. Yes, $20k, plus you must have over 200 transactions.
EV Subsidies Cancelled
Used or new EV vehicle credits/energy-efficient home improvement credits expire on Sept 30, 2025.
What’s the catch?
The bill is estimated to increase the national debt by $3.4 trillion over the next decade, according to the Congressional Budget Office.
How Could This Affect You Long-Term?
Critics warn that the proposal would increase borrowing costs for households and businesses, lower wages, lead to higher inflation, and crowd out private investment due to the increased government debt competing with private borrowers in financial markets.
Why Would Interest Rates Rise?
Wall Street Journal, Sat. July 7th:
”The long-term verdict might be rendered in U.S. bond markets. The U.S. borrows money by issuing Treasurys, and an oversupply of those bonds would drive up yields, which rise when prices fall. Because interest rates on other debt are linked to Treasury yields, that would also lift costs on mortgages, car loans and corporate bonds.”
How will the Big, Beautiful Bill affect your biz and your clients? What hacks do you use to minimise your taxes? Comment below!