What the One Big Beautiful Bill Act (OBBB) Means for You and Your Business

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBB) into law, marking the most sweeping tax overhaul since the 2017 Tax Cuts and Jobs Act. This landmark legislation introduces a wide range of changes for individuals, families, and businesses, many of which take effect as early as January 1, 2025.

Whether you're a taxpayer planning for next year, a business owner evaluating new deductions, or an investor adjusting to shifting incentives, the OBBB reshapes the tax landscape in ways that demand careful attention.

Below is a summary of the key provisions and how they could impact your tax strategy.

Key Individual Tax Provisions

Tax Rates and Standard Deduction

• The 2017 TCJA individual tax rates are now permanent.
• Standard deduction amounts (effective 2025):
  • $15,750 (Single)
  • $23,625 (Head of Household)
  • $31,500 (Married Filing Jointly)

SALT Deduction Cap

• Temporarily increased to $40,000 through 2029, indexed for inflation.
• No new restrictions on passthrough workaround strategies (e.g., PTETs).

Child and Dependent Credits

• Child tax credit increased to $2,200 (nonrefundable) and $1,400 refundable, both inflation-adjusted.
• Adoption credit: Up to $5,000 refundable.
• Dependent care FSA cap increased to $7,500.
• Child and Dependent Care Credit increased to 50% of qualifying expenses.

Senior Deduction (2025–2028)

• New $6,000 deduction for taxpayers aged 65+, phased out above $75,000 MAGI ($150,000 joint).

Trump Accounts

• New tax-advantaged savings accounts for minors.
• $5,000 annual contribution limit; $1,000 tax credit available for children born 2025–2028.

Temporary Deductions (2025–2028)

• Tip income: Up to $25,000 deductible.
• Overtime pay: Up to $12,500 ($25,000 for joint filers) deductible.
• Car loan interest: Deductible up to $10,000 if vehicle meets eligibility requirements.

Charitable Contributions

• Nonitemizers may deduct up to $1,000 ($2,000 joint).
• For itemizers, new 0.5% AGI floor on deductions; 1% for corporations.

Additional Highlights

• Qualified Business Income (QBI) deduction made permanent at 20%.
• Estate and gift tax exemptions increase to $15 million (single) and $30 million (joint) in 2026.
• Permanent cap of $750,000 on mortgage interest deduction.
• AMT and personal exemption limitations permanently extended.

Key Business Tax Provisions

Bonus Depreciation

• 100% bonus depreciation permanently restored for eligible property placed in service after January 19, 2025.

Section 179 Expensing

• Expensing limit increased to $2.5 million (phaseout begins at $4 million).

Research and Development (R&D) Costs

• Domestic R&D expenses immediately deductible starting in 2025.
• Retroactive relief available for small businesses back to 2022.

Paid Leave Credit

• Employer credit for family and medical leave made permanent.

Child Care Credit for Employers

• Credit increased from 25% to 40%, with the cap raised to $500,000 ($600,000 for small businesses).

Other Business Incentives

• Opportunity zones and New Markets Tax Credit made permanent.
• EBITDA-based interest deduction limit under Section 163(j) reinstated for tax years after 2024.
• Special 100% depreciation for qualified production property introduced.
• Percentage-of-completion method exception created for certain residential construction contracts.

Corporate and International Changes

FDII and GILTI Redefined

• Effective rate for both increases to 14%.
• Terminology and calculations restructured to simplify administration.

Foreign Tax Credit

• Deemed paid credit for Subpart F income increased from 80% to 90%.

BEAT

• Base erosion and anti-abuse tax (BEAT) rate increased to 10.5%.

Clean Energy Tax Incentives Terminated

The law eliminates many clean energy credits over the next two years, including:

• EV and alternative fuel vehicle credits
• Home energy efficiency and residential clean energy credits
• Hydrogen and sustainable aviation fuel credits
• Credits for energy-efficient commercial buildings and construction

Most of these expire between late 2025 and the end of 2027, depending on the provision and construction status.

Additional Administrative and Compliance Provisions

Information Reporting

• 1099-K reporting threshold restored to $20,000 and 200 transactions.
• 1099 reporting threshold increased to $2,000 and indexed starting in 2027.

Remittance Transfers

• New 1% tax imposed on outbound cash-based remittance transfers.

Farmland Sales

• New provision allows installment payments of tax on farmland sales to qualified farmers.

Employee Retention Credit (ERC)

• New penalties and due diligence rules introduced for promoters; stricter refund enforcement by the IRS.

Recommended Next Steps

This legislation presents both opportunities and challenges. We recommend taking the following actions as soon as possible:

• Evaluate 2025 midyear tax strategies to take advantage of new deductions, credits, and planning opportunities.
• Implement planning for individual deductions and credits now in effect for 2025 (e.g., senior deduction, child tax credit, tip income deduction).
• Review estate and gifting strategies ahead of the 2026 increase in exemption amounts.
• Assess business investments, bonus depreciation, and R&D planning to capitalize on recent changes and retroactive relief.
• Take action on clean energy investments before relevant credits begin phasing out in late 2025 through 2027.

Please reach out to your advisor or our office to discuss how this new law affects your situation and to develop a customized tax strategy.