The One Big Beautiful Bill Act
In July 2025, Congress passed, and President Trump signed, his promised tax policy and spending bill commonly referred to as the “One Big Beautiful Bill” Act (OBBB). The Act made significant changes to tax law, including the permanent extension of many provisions from the 2017 tax act originally set to expire in 2025, the early phase-out of some existing temporary provisions, and the creation of many new, but temporary, tax provisions. The law is very complex with numerous income phase-out provisions, varied effective dates, and a range of exceptions that taxpayers should be aware of. Additional guidance will be needed from the IRS to implement some provisions, so the following information is based on our current understanding. To summarize, we’ve included a list of the key individual, business, and energy provisions below.
Individual Provisions
| Individual income tax rates | The current seven tax brackets (10% to 37%) stay in place permanently, instead of expiring in 2025. |
| Standard deduction | Permanently increases the standard deduction, effective as of January 1, 2025: - Single / Married Filing Separately: $15,750 - Head of Household: $23,625 - Married Filing Jointly: $31,500 |
| “No tax” on tips | For 2025 - 2028 taxpayers are allowed a deduction up to $25,000 (for single or joint filers) for tip income received and reported on Form W-2 or 1099. The bill would also begin to phase out the deduction when the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 for married filing jointly). IRS to issue guidance to specify eligible occupations. |
| “No tax” on overtime | For 2025 - 2028 taxpayers can deduct $12,500 ($25,000 for married filing joint) of compensation received as an “overtime premium”. Deduction is subject to phaseout for income over $150,000 ($300,000 joint returns). |
| Extra deduction for seniors | The bill adds a $6,000 bonus deduction per senior (taxpayers over age 65 before Dec. 31, 2025) for 2025 - 2028, phases out if income exceeds $75,000 ($150,000 joint). Deduction is in addition to standard deduction or itemized deductions. |
| New car loan interest deduction | Allows temporary (2025 - 2028) deduction for up to $10,000 of interest on new car loans for vehicles purchased after January 1, 2025. Note: must be US-assembled passenger vehicles and loan is secured by the vehicle. |
| Itemized deductions phaseouts | For high income taxpayers in the 37% bracket the bill limits the tax benefit of itemized deductions to 35%. |
| State and local tax (SALT) deduction | The SALT provision increases the individual itemized deduction limit from $10,000 to $40,000 for 2025 (single and joint) and $40,400 for 2026, followed by 1% increases for 2027, 2028, and 2029. Beginning in 2030, the cap would revert to $10,000. The deduction would also be subject to a phaseout for taxpayers with modified adjusted gross income greater than $500,000 in 2025, $505,000 in 2026, and similar 1% increases thereafter, but the deduction would not be reduced below $10,000. In 2025 the increased deduction would be completely phased out when income exceeds $600,000 (single and joint). No SALT cap applies to deductions claimed by pass-through business entities. |
| Mortgage interest deduction | Permanently sets the mortgage debt limit at $750,000 for loans obtained after December 15, 2017, and now includes mortgage insurance premiums. |
| Home equity debt | The disallowance of home equity debt interest expense is made permanent. |
| Miscellaneous itemized deductions | Permanently terminates deductions for unreimbursed employee expenses, investment advisory fees, tax prep fees and certain legal fees. However, deduction is still allowed for unreimbursed employee expenses of eligible educators. |
| Moving expenses | Permanently terminates deduction (except for members of the Armed Forces). |
| Charitable deduction for non-itemizers (Cash donations only) | Starting in 2026, taxpayers that do not claim itemized deductions can claim a charitable contribution deduction of $1,000 for single filers or $2,000 for married filing jointly for cash contributions. This deduction is in addition to the standard deduction. |
| Charitable deduction for individuals who itemize | Effective in 2026, for itemized filers, charitable deductions are only allowed for contributions that exceed 0.5% of adjusted gross income. |
| 529 education plans | Expands to cover more K-12 expenses, homeschool costs, and postsecondary credentialing expenses. |
| “Trump Accounts” for kids | Starting 2026 creates a new tax-deferred investment account for children. These accounts would be set up for the exclusive benefit of an individual and would be eligible to receive contributions from parents, relatives, employers, and other taxable entities as well as nonprofit and government entities. Contributions are limited to $5,000 annually of after-tax dollars. For children born between 2025 and 2028 parents can contribute up to $1,000 and receive a tax credit for the same amount. Distributions can only be made after child reaches age 18. |
| Child Tax Credit (CTC) | Increased to $2,200 per child. The credit is partially refundable. |
Estate & Gift Provisions
| Estate and gift tax exemption | Effective 2026 increases the exemption to $15 million annually indexed for inflation. |
Business Provisions
| Bonus depreciation | Permanently extends and modifies additional first year depreciation deduction. Allowance increased to 100% for property acquired and placed in service on or after January 19, 2025. |
| Qualified Production Property “Manufacturing Property” | Bonus depreciation (at 100%) allowed on real property used for manufacturing, agriculture or chemical production where construction begins after January 19, 2025, and before January 1, 2029, and must be placed in service before January 1, 2031. |
| Section 179 Enhanced First Year Expensing | Increases the maximum amount a taxpayer may expense to $2.5 million and increases the phaseout threshold amount to $4 million for assets placed in service during tax years beginning after December 31, 2024. |
| Research and Experimental (R&E) expensing | Allows full expensing for domestic R&E costs from January 1, 2025. Foreign R&E remains at 15-year amortization. Small businesses (average gross receipts under $31 million) may retroactively apply the change back to 2022 by amending returns. Unamortized costs capitalized in 2022-2023-2024 for all taxpayers would be deductible in 2026 or ratably in 2026 and 2027. Awaiting IRS guidance for election to file amended returns and treatment on 2024 returns that have not yet been filed. |
| Business interest limitation | Effective in 2025, reverts to pre-2022 limitation being based on earnings before interest, taxes, depreciation and amortization. Provision is permanent. |
| Qualified Business Income (QBI) deduction | The 20% QBI deduction is now permanent. Phase-out thresholds increase to $75,000 for single filers and $150,000 for joint filers. A new minimum $400 deduction applies to taxpayers with at least $1,000 in QBI. |
| Pass-Through Entity Tax (PTET) and SALT deduction | Not adopted, were limitations contained in the House proposal to limit the benefits of deductions for state pass-through entity taxes. Individual SALT deduction increases to $40,000 for most filers. |
| Qualified Small Business Stock (QSBS) exclusion | Stock acquired after July 4, 2025 eligible for tiered exclusions, based on the years the taxpayer holds the QSBS: - 50% exclusion if held for three years; - 75% exclusion if held for four years; and - 100% exclusion if held for five or more years. - Maximum exclusion increased to $15 million from $10 million Increases eligibility limit on corporations’ aggregate gross assets at the time of issuance to a $75 million limit (up from $50 million). |
| Excess Business Loss (EBL) limitation | The EBL limitation is made permanent and current carryforward rules remain in place. |
| Employee retention credit (ERC) | ERC refund claims will not be allowed for Q3 and Q4 of 2021 if filed after January 31, 2024. |
| Opportunity Zones (OZs) | Establishes a permanent OZ policy, with a rolling 10-year OZ designation beginning in 2027. No change impacting current investors in Qualified Opportunity Funds. |
| Form 1099 information reporting | Reporting threshold increases to $2,000 (up from $600) for payments to businesses and service providers. Amount to be adjusted annually for inflation starting after 2026. |
| 1099-K Filing Rules Restored | Reinstates the pre-American Rescue Plan Act 2021 (ARPA) threshold to over $20,000 of payments received for the sale of goods and services and over 200 transactions. |
Energy Provisions
| Clean Vehicle Credit | Credit of up to $7,500 for the purchase of a new clean vehicle, expires for vehicles acquired after September 30, 2025. |
| Previously Owned Clean Vehicle Credit | Credit of up to $4,000 for the purchase of a used clean vehicle, expires for purchases made after September 30, 2025. |
| Commercial Clean Vehicle Credit | Credit expires for vehicles acquired after September 30, 2025. |
| Residential Clean Energy Credit | Credit of 30% of qualified costs, for items such as solar panels and solar heaters, expires for property placed in service after December 31, 2025. |
| Energy Efficient Home Improvement Credit | Credit of 30% of qualified costs, up to $1,200 per year, expires for property placed in service after December 31, 2025. |
International Provisions
| Global Intangible Low-taxed Income (GILTI); Foreign-derived Intangible Income (FDII); Base Erosion and Anti-abuse Tax (BEAT) | Changes are effective beginning in 2026. Effective tax rates are increased |
