How Tax and Business Provisions in the One Big Beautiful Bill Affect Government Contractors

Beyond agency budgets, the One Big Beautiful Bill Act includes tax and business provisions that can influence your contracting business’s bottom line.

Expanded SALT Deduction

The bill increases the cap on state and local tax (SALT) deductions from $10,000 to $40,000 for most taxpayers through 2029—a meaningful change for contractors operating in high-tax states.

Business Tax Breaks

Several provisions extend and expand business tax incentives, including deductions for qualified business income and other deductions originally from the 2017 Tax Cuts and Jobs Act. These can improve cash flow and profitability for pass-through entities common among small contractors.

Understanding how your business structure benefits (or doesn’t) from these tax changes is a strategic advantage. Smart tax planning now, in light of this law, can improve your financial position as you pursue government contracts.