The “One Big Beautiful Bill” Boosts Small Businesses in the U.S. Energy Sector

By SBE Council at 14 July, 2025, 2:33 pm

by Raymond J. Keating -

"The One Big Beautiful Bill Act" that was signed into law by President Trump includes important tax relief measures for entrepreneurs and small businesses. Provisions regarding energy in the legislation will also be positive for small businesses - not only in terms of producing a more reliable and affordable supply of energy for small business consumers, but also for the small firms that dominate the U.S. energy sector.

The main emphasis of the energy provisions is to remove governmental barriers to increased energy production, as well as the federal government stepping back from subsidies and preferences based on politics. Among the constructive energy measures included in the act, as highlighted by the Institute for Energy Research, are:

• It mandates "new oil and natural gas lease sales across federal lands and waters, unlinking them from renewables leasing and restoring royalty rates to pre-Inflation Reduction Act (IRA) levels. The law also reinstates full deductions for intangible drilling costs, delays the methane emissions fee until 2035 - providing the industry with more time to prepare - and increases the carbon capture tax credit for producers that utilize carbon dioxide to increase oil recovery."

• "The law phases out clean electricity investment and production tax credits for wind and solar after decades of coverage. Originally intended for nascent industries, the investment credit was significantly enhanced in 2005, having been initially introduced in 1978 and having been extended 15 times."

• "The bill eliminates the $7,500 federal tax credit for new electric vehicle (EV) purchases and leases, as well as the $4,000 credit for used EVs, effective September 30."

Undertakings like solar and wind power, and electric vehicles should stand or fall based on market competition and consumer sovereignty, not based on politics overruling the choices made in the marketplace.

EnergyIntel.com also noted: "…the reversal of an IRA-era corporate tax policy regarding how alternative minimum tax is calculated was applauded by the likes of the American Petroleum Institute and the American Exploration & Production Council… Specifically, the change once again allows producers to fully deduct so-called intangible drilling costs, which encompass roughly 60%-80% of well costs. The IRA [Inflation Reduction Act] only allowed a portion of these costs to be deducted."

Reducing government costs to energy investment, while at the same time reducing distortive and wasteful subsidies, amounts to a solid energy policy combination, along with other broader provisions that avoid tax increases for entrepreneurs and small businesses on income and investment.

As SBE Council has noted before, the energy sector is not just about larger businesses. In reality, energy industries are overwhelmingly populated by small businesses. For example, consider the breakdown of employer firms by firm size in various energy industries:

[Link]

So, the pro-energy measures in "The One Big Beautiful Bill Act" very much are pro-small business measures.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of "The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship.