The Small Business Boost

Recent legislation, the One Big Beautiful Bill Act, has introduced significant tax incentives for small and medium-sized businesses, and these changes are already generating widespread interest. This is no surprise, as businesses with fewer than 500 employees make up more than 80% of total employment in the U.S. Specifically, companies with 1–49 employees represent 44% of total employment, while those with 50–499 employees account for another 38%. The bill includes several impactful provisions. Chief among them is the permanent 20% qualified business income (QBI) deduction for pass-through entities, such as sole proprietorships, partnerships, LLCs, and S Corporations. Previously set to expire, this deduction now offers long-term tax relief. Another key change is the immediate deduction for domestic research and development expenses, which allows businesses to write off those costs in the year incurred. This improves cash flow and promotes innovation. Additionally, updated rules around interest deductibility now enable companies to deduct more borrowing costs, potentially encouraging greater investment. One of the most business-friendly updates is the 100% bonus depreciation for new capital investments. Companies can fully write off the cost of qualifying purchases like equipment, vehicles, and software in the year they are acquired. Collectively, these incentives aim to stimulate business expansion, job creation, and overall economic growth. While our team continues to analyze the long-term impact of the bill, early indicators point to strong potential for positive outcomes.

Inflation, Interest Rates, and Market Signals

Understanding inflation and interest rate trends is essential to interpreting broader economic momentum. Two key metrics we monitor closely are the Consumer Price Index (CPI) and the Producer Price Index (PPI). The PPI measures what producers pay for raw materials and services, while the CPI reflects the prices consumers ultimately face. Earlier in the year, we saw the PPI rising faster than the CPI, a trend that historically signals rising consumer costs ahead. Recently, however, the PPI has started to cool down while the CPI has moved higher. This shift is noteworthy, particularly considering new tariffs, which often contribute to inflation. Encouragingly, imported goods were up just 0.10%, indicating minimal tariff-driven inflation at this point.

Perhaps even more important than inflation readings themselves is how the market interprets them. The 10-Year U.S. Treasury yield is widely considered the most influential interest rate in the world, serving as a benchmark for mortgage rates and corporate borrowing costs. On July 14th, the 10-Year Treasury yield peaked at 4.49%, before declining to 4.37%. Though this movement may seem minor, the 4.5% threshold has proven significant. Historically, when the 10-Year yield rises above 4.5%, equity markets tend to move sideways or decline. That’s because higher yields make fixed-income investments more attractive and raise borrowing costs for businesses, potentially hurting corporate earnings. Despite inflation remaining above the Federal Reserve’s 2% target, the market’s reaction, particularly falling yields, suggests confidence that inflation is under control. As long as the 10-Year Treasury remains below that 4.5% barrier, the outlook for U.S. equities remains positive.

Greg Powell, CIMA®

President and CEO

Wealth Consultant

Email Greg Powell here

Bobby Norman, CFP®, AIF®, CEPA®

Managing Director

Wealth Consultant

Email Bobby Norman here

Trey Booth, CFA®, AIF®

Chief Investment Officer

Wealth Consultant

Email Trey Booth here

Ty Miller, AIF®

Associate Vice President

Wealth Consultant

Email Ty Miller here

Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

No strategy can ensure success or protect against a loss.

Stock investing involves risk including potential loss of principal.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.

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