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.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.