On July 4, 2025 President Trump signed into law the 800-page “One Big Beautiful Bill Act (OBBBA)”. It makes permanent certain expiring provisions of prior tax law, eliminates certain existing tax breaks and creates new ones.
Following is a list of a few of the changes. As my mother used to say, “The devil is in the details!”
INDIVIDUALS
- Makes permanent the TCJA’s individual tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%
- Nearly doubles the standard deduction
- For 2025–2028, creates an additional deduction of up to $6,000 for taxpayers age 65 or older, with income-based phaseouts
- For 2025–2028, creates a new deduction of up to $25,000 for tip income in certain industries, with income-based phaseouts
- For 2025–2028, creates a new deduction of up to $12,500 for single filers or $25,000 for joint filers for qualified overtime pay, with income-based phaseouts
- For 2025–2028, creates a new deduction of up to $10,000 for qualified passenger vehicle loan interest on the purchase of certain American-made vehicles, with income-based phaseouts
- Increases the limit on the deduction for state and local taxes (the SALT cap) to $40,000 beginning in 2025, with an income-based reduction and a 1% increase each year through 2029, after which the $10,000 limit will return
- Creates a permanent charitable contribution deduction for nonitemizers of up to $1,000 for single filers and $2,000 for joint filers, beginning in 2026
- Permanently increases the child tax credit to $2,200, beginning in 2025, with annual inflation adjustments going forward
- Expands the allowable expenses that can be paid with tax-free Section 529 plan distributions, beginning with distributions made after July 4, 2025
- Expands the qualified small business stock gain exclusion for stock acquired after July 4, 2025
- Permanently increases the federal gift and estate tax exemption amount to $15 million for individuals and $30 million for married couples beginning in 2026, plus an annual adjustment for inflation for married couples, starting in 2026, with annual inflation adjustments going forward
- Eliminates several clean energy tax credits, generally after 2025, including the energy-efficient home improvement and residential clean energy credits — but the clean vehicle credit ends Sept. 30, 2025
BUSINESSES
- Makes permanent and expands the 20% Sec. 199A qualified business income (QBI) deduction for owners of pass-through entities and sole proprietorships
- Makes permanent 100% bonus depreciation for the cost of qualified assets, for property acquired after January 19, 2025
- Creates a 100% deduction for the cost of “qualified production property” for qualified property placed in service after July 4, 2025, and before 2031
- Increases the Sec. 179 expensing limit to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with annual inflation adjustments going forward • Increases the cap on the business interest deduction beginning in 2025 by excluding depreciation, amortization and depletion from the calculation of adjusted taxable income • Makes permanent the excess business loss limit
- Permanently allows the immediate deduction of domestic research and experimentation expenses (retroactive to 2022 for eligible small businesses) not used to claim the research credit
• Eliminates clean energy tax incentives, generally after 2025, including the alternative fuel vehicle refueling property credit and the Sec. 179D deduction for energy-efficient commercial buildings (both after June 30, 2026) — but the qualified commercial clean vehicle credit ends Sept. 30, 2025
