How the new tax law could impact your ecommerce business
How the new tax law could impact your ecommerce business
Running an ecommerce business is hard enough 鈥 keeping customers happy, managing inventory, chasing down suppliers. Then arrives, and the rules seem to have changed again.
Congress just passed , also known as the One Big Beautiful Bill Act (OBBBA), the biggest tax overhaul in nearly a decade. Buried in hundreds of pages of legalese are several changes that could put real money back in your business 鈥 if you know how to use them.
On Aug. 29, a federal Appeals Court invalidated certain authorities used to set tariffs. The decision left existing tariffs in place until October 14. Further appeals mean that rules may continue to fluctuate.
has pulled out the updates that matter most for online sellers, so you can focus on instead of .
Permanent 20% deduction for pass-through businesses
Before: , which allows many LLCs, sole proprietorships, and S corps to deduct up to 20% of their business income, was temporary and set to expire.
What鈥檚 new: The deduction is now permanent. Starting in 2026, there鈥檚 also a $400 minimum deduction for businesses earning at least $1,000 in qualified income, even if the 20% deduction doesn鈥檛 apply.
Why it matters for ecommerce: Most small ecommerce founders operate as . If your online store earns up to $80,000 in profit, you may be able to deduct up to $16,000 before calculating federal taxes.
Full bonus depreciation is back
Before: Under the (TCJA), businesses could deduct 100% of the cost of eligible property (like equipment) in the year it was bought, but only through 2022. After that, the percentage dropped each year until it was set to expire in 2027.
What鈥檚 new: restores the full 100% bonus depreciation for qualifying purchases placed in service after January 19, 2025.
Why it matters for ecommerce: If you make large capital purchases 鈥 for example, a high-end product photography setup, bulk warehouse shelving, or specialized packaging machinery 鈥 you can now deduct the full cost in the first year rather than spreading the deduction over time. This can reduce your taxable income for that year and improve .
Higher threshold for sending 1099 forms
Before: You had to send a to any contractor you paid more than $600 in a year.
What鈥檚 new: Starting in 2026, the threshold rises to $2,000 and will adjust with inflation beginning in 2027.
Why it matters for ecommerce: Many online sellers hire freelancers for things like product photography, marketing, digital design, and copywriting. If you pay a contractor, say, $1,500 for their freelance work on a seasonal product in tax year 2026, you won鈥檛 need to issue a 1099 form, reducing paperwork.
1099-K reporting threshold restored
Before: Platforms like Stripe, PayPal, and Shopify Payments issued a 1099-K form if you had more than $20,000 in annual gross payments and over 200 transactions. The threshold was , creating confusion and extra tax forms for many sellers.
What鈥檚 New: OBBBA restores the original $20,000/200 transactions threshold, retroactive to 2022.
Why it matters for ecommerce: If you sell, say, $15,000 across 150 orders in a year, you won鈥檛 receive a 1099-K form, reducing unnecessary tax documents and potential confusion for small-volume sellers.
Changes to import rules
Before: The 鈥渄e minimis鈥 rule let you import goods under $800 without paying duties. After concerns about the misuse of this exemption, OBBBA made changes to address this.
What鈥檚 new: Penalties now apply for failing to claim this exemption properly, and while OBBBA phases out the rule in 2027, an signed at the end of July subjects goods valued at or under $800 to all applicable duties starting on August 29, 2025.
Why it matters for ecommerce: Small sellers should review import duties and consider working with their freight forwarders and suppliers to prepare for changes.
Immediate deduction for R&D costs
Before: Research and development costs had to be deducted over five years, delaying the full tax benefit.
What鈥檚 new: You can now deduct R&D spending in the year it happens. For businesses under $31 million in average annual revenue, this also applies retroactively to tax years 2022鈥2024.
Why it matters for ecommerce: If you鈥檙e building something new 鈥 maybe a custom Shopify app, a unique product design, or an innovative packaging solution 鈥 you might be doing R&D without realizing it. These costs can now be deducted in full the same year you spend the money, and you might even be able to claim retroactive benefits for work you did in 2022, 2023, or 2024.
The One Big Beautiful Bill Act brings several opportunities for ecommerce founders to lower taxable income and simplify compliance. While not every change will apply to every seller, provisions like the return of full bonus depreciation, a permanent QBI deduction, higher 1099 thresholds, and changes to import rules could directly impact smaller online businesses.
Work with a tax professional to determine how these updates fit your business strategy 鈥 and to capture any retroactive benefits for the past few years.
For specific guidance on your tax filing obligations, please consult with a qualified tax professional. Mercury does not provide tax advice. Tax regulations can be complex and vary based on individual circumstances, so it's important to seek personalized advice from an expert who can assess your unique situation.
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