2025 tax law changes for businesses, and where DC, Virginia and Maryland differ

• Bonus depreciation: a permanent 100% first-year deduction for qualified property acquired after January 19, 2025. For the first tax year ending after that date, businesses could elect 40% instead.
• Research and experimental costs: domestic costs are deductible again for tax years beginning after December 31, 2024 (new Section 174A). Unamortized 2022–2024 costs can be deducted in 2025 or over two years. The small-business election to amend 2022–2024 returns closed July 6, 2026.
• Section 179: $2,500,000 for tax years beginning in 2025 (phase-out from $4,000,000), and $2,560,000 for 2026 (phase-out from $4,090,000).
• QBI deduction (Section 199A): permanent at 20%. From 2026, a $400 minimum deduction applies with at least $1,000 of QBI from an active business, and the phase-in range widens to $75,000 ($150,000 joint).
• SALT cap: $40,000 for 2025 and $40,400 for 2026, reduced for income above $500,000 ($505,000 for 2026), returning to $10,000 in 2030. The law did not restrict state pass-through entity taxes, which keeps Virginia and Maryland PTET elections relevant.
• 1099 reporting: 1099-NEC and 1099-MISC start at $2,000 for payments made after December 31, 2025. Form 1099-K is back to more than $20,000 and more than 200 transactions.
• Beneficial ownership (BOI) reports: FinCEN's final rule, effective August 14, 2026, permanently exempts entities created in the U.S.

States decide whether to follow federal changes. DC, Virginia and Maryland each decoupled from the largest business provisions, so the same purchase or research spending can produce a large federal deduction and a smaller state deduction. That difference needs tracking on separate depreciation schedules, and it changes how much tax you should set aside for each state.

For Maryland, the automatic decoupling from immediate research expensing covered tax year 2025; 2026 treatment depends on future legislation, so we confirm it before filing.