Most content creators think a tax bill passing in Washington has nothing to do with them until April. Four provisions in the new law change what you owe, what paperwork you file, and whether the S corp vs LLC question you’ve been putting off is suddenly worth answering this quarter instead of next year.
At BizBud, we help small business owners, content creators, influencers, and digital nomads win at the tax game so they don’t pay a dollar more than the law requires. We read through the thing so you don’t have to. Here’s what actually moves the needle for you, with the math laid out.
The Headline Version
| Provision | Before | Now | Who it helps most |
|---|---|---|---|
| 1099 filing threshold | $600 | $2,000 | Anyone hiring contractors |
| QBI deduction (20% of net income) | Set to phase out | Extended | Sole proprietors, pass-throughs |
| Bonus depreciation | Dropping to 80% | Back to 100% | Real estate and equipment buyers |
| Tax on tips | Fully taxable | Up to $25,000 exempt from federal income tax | Salons, restaurants, service businesses |
Four changes. Real dollars. Let’s break each one down.
1. The 1099 Threshold Jumped From $600 to $2,000
If you paid a contractor more than $600 in a year, you had to issue them a 1099. Every single one. And if you hire a lot of contract labor, January turned into a paperwork gauntlet where you either burned a weekend or paid someone to burn it for you.
That threshold is now $2,000 for payments made on or after January 1, 2026.
Say you’re a photographer shooting a wedding and you bring in a second shooter for $1,000. Under the old rule, that’s a 1099 you have to prepare, send, and file. Under the new rule? Nothing. No form, no filing fee, no chasing them for a W-9 in the last week of January.
Six hundred dollars was never a meaningful reporting number in the first place. Two thousand isn’t generous either. But it’s better, and for creators who pay a rotating cast of editors, VAs, assistants, and one-off collaborators, it cuts a real chunk of your January workload and your prep fees.
One thing to watch: the $600 threshold still governs your 2025 payments. If you’re filing forms in January 2027, use $2,000. If you’re cleaning up anything from 2025, it’s still $600.
What to do: Pull your contractor payments for the year right now and sort them by total paid. Anything under $2,000 comes off your January list. Keep collecting W-9s anyway. You still need them if someone crosses the line in December.
2. The QBI Deduction Survived, and It’s the Real S Corp vs LLC Question
The qualified business income deduction was scheduled to phase out. It didn’t. It’s extended, and it remains one of the most valuable deductions available to anyone running a pass-through business.
Here’s the mechanic in plain English. QBI gives you a deduction equal to 20% of your net business income, taken at the individual level after your business expenses are already accounted for.
| Line item | Amount |
|---|---|
| Net business income after expenses | $50,000 |
| QBI deduction (20%) | $10,000 |
| Taxable income | $40,000 |
You earned $50,000. You pay tax on $40,000. No receipts to hunt down, no purchase you have to make, no strategy to execute. It just applies.
And this is where entity structure stops being a theoretical debate. QBI flows to pass-through owners. Sole proprietors, LLC members, S corporation shareholders. That’s the club.
S Corp vs C Corp: Which Side of the Line Are You On?
The S corp vs C corp comparison usually gets framed around self-employment tax, and that matters. But the QBI extension adds weight to the pass-through side of the scale, because a C corporation doesn’t pass income through to your personal return the way an S corp does. Different tax world, different rules, different planning.
Neither structure is universally correct. C corps have their own advantages depending on where you’re headed, especially if you’re building something you plan to sell. Pass-throughs give you the 20% deduction and simpler flow of income. What matters is that the extension of QBI just made this a live decision instead of a someday decision.
How Much Does It Cost to Start an LLC Compared to What You’d Save?
State filing fees vary widely, and there are annual costs on top of the initial formation. But run the comparison honestly. If your net income is meaningful and you’re currently operating as an unstructured sole proprietor, the formation and maintenance cost is usually small next to what proper structure and the QBI deduction save you.
Ask yourself this: are you already taking the 20%? A surprising number of business owners aren’t, because their preparer never brought it up.
What to do: Look at last year’s return and find the QBI line. If it’s blank and you had net business income, you left money on the table. Get that fixed before you file again, either with a new preparer or with us.
3. Bonus Depreciation Is Back at 100%
This one was headed to 80%. It’s back to full, and it now applies to qualifying property acquired after January 19, 2025.
Bonus depreciation mostly matters if you’re buying rental real estate or making big equipment purchases, and it’s the reason so many creators with real income eventually buy property.
Normally, you depreciate a rental property over 27.5 years. You take a slice of the expense annually, and that’s your deduction. Slow, steady, unexciting.
A cost segregation study changes that. You pay a specialist to break the property into buckets based on the useful life of each component. A house isn’t one thing. It’s a foundation, a roof, cabinets, lighting, doors, flooring, landscaping. Some of that lasts more than 20 years. Some last 15, or 10, or 5.
Anything designated under a 20-year useful life can be expensed in the first year instead of stretched across nearly three decades.
| Purchase price | Typical share eligible | First-year deduction |
|---|---|---|
| $100,000 | 25% to 30% | Roughly $25,000 |
A $100,000 property is unrealistically cheap in most markets, but the percentage scales. Twenty-five to thirty percent of the purchase price becomes a first-year write-off, and depending on your AGI and whether you qualify as a real estate professional, you may be able to use it to offset other income.
That’s a powerful deduction, and it’s now locked at 100% instead of sliding down. But cost segregation isn’t free and it isn’t automatic. Run the numbers before you commit.
What to do: If you bought a rental this year or you’re planning to, price out a cost segregation study before year end. The deduction only lands in the year you place the property in service.
4. No Tax on Tips (And What It Actually Means)
You’ve heard about this one. The version circulating online is usually wrong.
If you own a salon, a restaurant, or any service business with tipped employees, your team can deduct up to $25,000 in qualified tips from their federal taxable income. That’s a real benefit for them.
But “no tax” is not the same as no tax. Three things the headlines leave out:
- It’s a deduction, not an exemption. Tips still count as income and still get reported. The deduction reduces federal income tax only.
- Social Security and Medicare still apply, at around 7.65% on the employee side. State taxes depend on where you are; most states haven’t adopted a matching carve-out.
- It’s temporary. The provision covers tax years 2025 through 2028 and sunsets after that unless Congress extends it.
Here’s how it plays out for an employee earning $50,000 in wages plus $25,000 in tips:
| Item | Amount | Federal income tax? |
|---|---|---|
| Wages | $50,000 | Yes |
| Tips | $25,000 | No |
| Total reported on W-2 | $75,000 | Partially |
| Social Security and Medicare | ~7.65% | Applies to both |
Notice the reporting row. You still report the full $75,000 on the W-2. From the owner’s side, this creates more work, not less, because your payroll reporting has to correctly separate qualified tip income from regular wages. Starting with 2026 earnings, employers report total cash tips in Box 12 with code TP and the employee’s Treasury Tipped Occupation Code in the new Box 14b. Get that wrong and you’ve created a problem for your employee and yourself.
It also phases out above $150,000 of modified adjusted gross income for single filers and $300,000 for joint filers, shrinking by $100 for every $1,000 over the line. So if your top stylists or servers are genuinely killing it, the benefit narrows.
One more thing worth knowing: the list of qualifying occupations is now final. Treasury published a preliminary list in September 2025 and finalized the rules in April 2026, covering 70-plus occupations across eight code categories. If your employees’ roles aren’t on it, there’s no facts-and-circumstances workaround. Check the list rather than assuming.
What to do: Talk to whoever runs your payroll now, before the next filing cycle. And yes, this is a legitimate reason to encourage tipping. Your team keeps more of it.
The Bonus Items Worth Asking About
Three more provisions came through that don’t apply to everyone but are worth a conversation with your preparer if they fit your situation:
- Section 179, another route to expensing equipment purchases, which often interacts with bonus depreciation
- QSBS, relevant if you’re structured as a C corporation and building toward an exit
- Trump accounts, a new savings vehicle worth understanding before you dismiss it
None of these are universal. All of them are worth ten minutes of your accountant’s time if you’re in the right category.
Your Pre-January Checklist
Preparation beats panic every single time. Here’s the order we’d work in:
- Sort contractor payments against the new $2,000 threshold and shrink your 1099 list.
- Confirm you’re claiming QBI. Check last year’s return. If it’s missing, you overpaid.
- Revisit your entity structure now that the 20% deduction is locked in for pass-throughs.
- Price a cost segregation study if you own or are buying rental property.
- Fix your payroll reporting for tipped employees before the next W-2 cycle.
None of this requires you to become a tax expert. It requires you to know which questions to ask and to ask them before December turns into April.
The people who overpay aren’t lazy or incompetent. They’re just working from last year’s rules with a preparer who never mentioned the deductions they qualified for. Don’t be that person two filing seasons in a row.
If you want someone to walk through your specific numbers, entity structure, and which of these four provisions actually applies to your business, that’s exactly what we do at BizBud. Bring your last return. We’ll find what’s missing.
About The Author:
Cameron Botes is the founder of BizBud, a tax and accounting firm built for content creators, influencers, digital nomads, and entrepreneurs building businesses across borders. A former professional soccer player across four continents, Cameron brings the same discipline, preparation, and pressure-tested execution from his athletic career into helping business owners plan ahead, stay compliant, and keep more control over their financial future.
Since founding BizBud in 2020, Cameron has grown the firm from a one-person practice into a team of CPAs and tax advisors serving hundreds of clients across the U.S. and around the world. With an MBA in finance and accounting, international business experience, and a team with backgrounds at firms like PwC, Deloitte, and EY, Cameron helps creators and founders simplify taxes, clean up their books, and build smarter systems so they can focus on the work they actually love.