15 Sep ONE BIG BEAUTIFUL BILL ACT: KEY TAX PROVISIONS

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, by President Donald Trump, is a comprehensive tax and spending bill that extends provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introduces new tax policies affecting individuals, businesses, and estates. Below is a summary of some of the key tax provisions.

Key Tax Provisions for Individuals 

• Permanent TCJA Extensions: The OBBBA makes permanent the TCJA’s individual tax rates (10%, 12%, 22%, 24%, 32%, 35%, 37%) and eliminates the personal exemption for most taxpayers, except for a temporary $6,000 exemption for seniors (65+) through 2028, subject to income limits. 

• Standard Deduction Increase: The base standard deduction rises to $15,750 (single), $23,625 (head of household), and $31,500 (married filing jointly), adjusted annually for inflation. A temporary $2,000 increase applies for joint filers, with an additional $6,000 for seniors through 2028. 

• SALT Deduction Cap: The state and local tax (SALT) deduction cap increases from $10,000 to $40,000 (2025–2029, inflation-adjusted) for taxpayers with modified adjusted gross income below $500,000, reverting to $10,000 in 2030. Pass-through entity tax (PTET) SALT deductions remain intact, despite earlier proposals to limit them for specified service trades or businesses (SSTBs). 

• Tip and Overtime Deductions: Through 2028, a new above-the-line deduction allows up to $25,000 for qualified tips and $12,500 ($25,000 for joint filers) for qualified overtime pay, phasing out for incomes above $150,000 ($300,000 for joint filers). Eligible individuals need a work-eligible Social Security number and must file jointly if married. 

• Child Tax Credit: The maximum child tax credit increases to $2,200 per qualifying child starting in 2025, with annual inflation adjustments from 2026. 

• Alternative Minimum Tax (AMT): The TCJA’s increased AMT exemption is permanent, but the phaseout threshold reverts to $500,000 ($1 million for joint returns), indexed for inflation, with a 50% phaseout rate for income above the threshold. 

• Mortgage Interest Deduction: The TCJA’s $750,000 limit on home mortgage acquisition debt and exclusion of home-equity interest remain permanent. 

Key Tax Provisions for Businesses 

• Bonus Depreciation: 100% bonus depreciation is reinstated for property acquired and placed in service after January 19, 2025, allowing full expensing in the year of acquisition. 

• Section 179 Expensing: Enhanced Section 179 deductions allow immediate expensing of eligible property, with updated limits to encourage small business investment. 

• R&D Expensing: Domestic research and experimental expenses are deductible in the year incurred, while foreign R&D expenses must be capitalized and amortized over 15 years. 

• Qualified Business Income (QBI) Deduction: The Section 199A QBI deduction remains at 20% permanently, with an expanded phase-in range ($75,000 for non-joint, $150,000 for joint returns) and a $400 minimum deduction for taxpayers with at least $1,000 of QBI. 

• Qualified Opportunity Zones: The program is made permanent, with modifications to broaden eligibility and benefits for investors. 

• Business Interest Deduction: The Section 163(j) calculation for business interest deductions is reinstated, and loss limitation rules are made permanent with updated excess business loss (EBL) determinations. 

Estate and Gift Tax Changes 

• Exemption Increase: Starting in 2026, the estate and gift tax exemption rises to $15 million for single filers ($30 million for married filing jointly), indexed for inflation, providing significant planning opportunities for high-net-worth clients. 

Other Notable Provisions 

• Clean Energy Credits: The OBBBA phases out or restricts several Inflation Reduction Act energy credits (e.g., Sections 25C, 25D, 30D), impacting clean energy tax planning starting in 2026. 

• Fiscal Impact: The Congressional Budget Office estimates the OBBBA will increase the federal deficit by $2.8–$3.8 trillion by 2034, with $4.46–$5 trillion in tax revenue reductions, offset by $1.1 trillion in spending cuts, including $700 billion from Medicaid over 10 years. 

• Immigration and Spending: The bill allocates $150 billion for border enforcement, including $46.5 billion for border wall construction and $59 billion for ICE operations, alongside cuts to Medicaid and SNAP benefits with new work requirements.