If you own a business and have children, the One Big Beautiful Bill Act (OBBBA) just made one of the most popular family tax strategies even more valuable—starting in 2025.

Bigger Standard Deduction = More Tax-Free Income

Under OBBBA, the standard deduction for a single taxpayer jumps to $15,750 in 2025 (with annual inflation adjustments going forward).

That means your child can earn up to $15,750 in wages from your business and pay zero federal income tax—whether you take the standard deduction or itemize.

Sole Proprietors & Spouse-Only Partnerships: Extra Perks

If you operate as a sole proprietor or a spouse-only partnership, the benefits are greater:

• No FICA taxes (Social Security & Medicare) on wages paid to children under 18.
• No FUTA tax (federal unemployment) on wages paid to children under 21.

This means you can deduct their wages while avoiding employment tax costs entirely.

💡 Example:
Hire 3 children. Pay each $15,750 for legitimate work.

• Kids owe zero federal income tax.
• You deduct $47,250 on your Schedule C.
• This reduces both your income tax and self-employment tax, potentially saving you thousands.

S & C Corporations:

Even if you operate through an S corp or C corp—where payroll taxes apply—the strategy still works:

• FICA and FUTA taxes are owed, but those taxes are deductible.
• Your children still owe no federal income tax on their wages.