Key insights
- The new tax law offers many business tax savings and business transition benefits for private equity firms.
- The permanent extension of 100% bonus depreciation and the restored enhanced business interest expense deductions are two business benefits especially helpful to private equity.
- The increased estate and gift tax exemption and the expanded qualified small business stock tax exclusion greatly enhance business transitions.
Use new tax benefits to save on business operations, transitions.
The new tax law marks one of the most consequential shifts in business taxation and deal structures in years.
The One Big Beautiful Bill Act is wide ranging — providing new and expanded benefits for businesses and individuals — and private equity (PE) firms are rapidly recalibrating strategies to seize its built-in advantages. Explore the many new opportunities for PE firms.
New business tax benefits for private equity firms
One of the new tax law’s biggest benefits for private equity is restoring EBITDA-based business interest expense deductions. This reversal from the prior EBIT standard offers new opportunities in the leverage model used in many PE deals.
Portfolio companies with high capital intensity — particularly health care, education, and tech-enabled services — now enjoy enhanced capacity to deduct interest, improving both cash flow and internal rate of return prospects.
The permanent extension of 100% bonus depreciation offers immediate expensing for qualifying property, strengthening after-tax earnings. Service-oriented companies investing in tech infrastructure, medical devices, or educational platforms stand to benefit, making them more attractive targets.
How the new tax law impacts deal structuring and business transitions
The expansion of the qualified small business stock (QSBS) tax exclusion greatly enhances business transitions. The asset threshold increase to $75 million and allowing partial exclusions at year three grant PE firms greater flexibility in scaling and monetizing small to mid-sized service businesses.
The law also raises estate and gift tax exemptions to $15 million, unlocking wealth transfer opportunities for PE executives, founders, and investors. Family offices and succession planners are particularly active in leveraging this change to build enduring enterprise value while reducing taxes.
Key acquisition industries for private equity with the new tax law
Service firms, especially those aligned with the new tax law’s incentives — telehealth, child care, and educational services — are surfacing as prime acquisition candidates. These sectors combine recurring revenue with eligibility for expanded employer-sponsored benefits, creating a dual engine of growth and compliance demand.
Notably, PE firms are eyeing tech-enabled platforms in these sectors, such as remote-care solutions or AI-based tutoring services, which scale more efficiently under the new tax law’s supportive structure.
How CLA can help with private equity opportunities in the new tax law
The new tax law isn’t just a legislative change — it’s a blueprint for strategic transformation. CLA’s experienced private equity and tax teams can help you explore the many tax and business transition benefits and develop strategies to help enhance savings.
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