This is the One Big Beautiful Bill Act (OBBBA) that was signed into law on July 4th, 2025.
What’s in H.R. 1 that matters for travel businesses?
1. Qualified Business Income (Section 199A) Deduction – Pass-Through Entities
H.R. 1 makes the 20% pass-through deduction (often a boon to S-corps, partnerships, LLCs) permanent1 and extends its reach—but with nuanced shifts:
- It increases the income thresholds before phase-out: married filers start at $150K (up from $100K), singles at $75K (from $50K)
- The effective deduction mechanics remain influenced by taxable income and whether operations fall under “specified service trades or businesses” (SSTBs)—a category that may or may not envelop your travel business depending on its structure and activities
2. Full Expensing and Bonus Depreciation
Ads, equipment—maybe those snazzy new travel kiosks—are tax-friendly now:
- H.R. 1 reinstates 100 % bonus depreciation under Section 168(k) for certain business property
- Plus, it allows immediate expensing for domestic R&D expenditures under Section 174, though that’s more relevant to travel tech rather than tour operators or guides
3. Business Interest Expense Limitation
That corporate-afflicted interest cap (Section 163(j), you know, from post-TCJA) gets restored or maintained in its EBITDA-based format—still a key cost factor if you’ve financed new assets or expansions
4. Excess Business Loss Limitation
For the travel-related solo entrepreneurs or small firms, H.R. 1 extends the cap on excess business losses for non-corporate taxpayers—meaning you can’t write off unlimited losses against your other income—but keeps it in place rather than letting it expire
5. SALT Deduction Cap on State and Local Taxes
Applicable if your travel business is a sole proprietor or pass-through entity and you itemize (maybe not common—but if you do):
- The SALT deduction cap for individuals/business-related taxes hikes up temporarily to $40,000 (indexed for inflation through 2029), reverting to $10,000 in 2030. For income above $500K, the deduction phases down but doesn’t dip below $10K
6. Temporary Deductions: Tips and Overtime
These may be relevant if your business employs staff handling guest services, gratuities, or overtime hours:
- Up to $25,000 of cash tip income and up to $12,500 (single) / $25,000 (joint) in overtime pay are deductible from federal taxable income, through 2028, subject to MAGI phase-outs ($150K single, $300K joint)
- If your employees are tipped workers (e.g., concierges, chauffeurs), this can indirectly affect your payroll tax credits—less taxable wages means lower employer taxes
Summary Table For Travel Businesses
| Provision | Implication for Travel Businesses |
|---|---|
| Section 199A (20% pass-through deduction) | Extended thresholds might improve margins if structured as pass-through |
| 100% Bonus Depreciation & R&D Expensing | Accelerated write-offs for new equipment or tech-related investments |
| Interest Expense Limitation | Keeps EBITDA-based cap—impacts heavily leveraged expansions |
| Excess Business Loss Limitation | Continues loss offset limits for non-corporate firms |
| SALT Deduction Cap (individual side) | Temporarily higher cap helps if itemizing with large state taxes |
| Tips & Overtime Deductions | Reduces taxable income for staff in tipped/overtime roles—affects payroll taxes indirectly |
Epilogue: Why This Matters for You
If your travel business—be it a tour operator, a small boutique travel agency, or a hospitality provider—is organized as an LLC, partnership, or S-corp, many of these changes tip the scales in favor of efficiency, but not always in the obvious direction:
- Think bigger on bonus depreciation and R&D write-offs—if you’re tech investing or revamping gear, you may accelerate returns.
- Look closely at your structure: pass-through entities now enjoy better deduction thresholds, but still contend with SSTB rules.
- If you’ve leaned into leveraged growth, watch interest deductibility ceilings.
- Staff intensive businesses (e.g., tours with tips/overtime) might enjoy payroll relief from the temporary deductions.
- And if your location faces steep state taxes, that inflated SALT cap could relieve some pinches—for now.
- Permanent just means that it won’t automatically end. Congress can pass new laws that could change or end the law. ↩︎
Happy Lifestyle Accounting 