The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, brings sweeping, permanent changes to the federal tax code. These changes affect how families preserve wealth, how business owners plan for growth, and how individuals manage taxes over time. Below is a summary of the most likely relevant provisions.
| Policy Area | 2024 Provision | New 2025 Provision | Details & Effective Dates |
| Individual Income Tax | TCJA cuts set to expire at the end of 2025; SALT cap $10K | Extension of 2017 TCJA cuts & increased SALT cap | Low brackets extended; SALT cap raised to $40K for incomes < $500K; reverts in 5 years |
| Tips Deduction | Tips were fully taxable; no deduction | Deduction for eligible cash tips in qualifying industries | Deduct up to $25K in reported tips (joint: $25K); through 2028; subject to AGI |
| Overtime Deduction | Overtime was fully taxable; no deduction | Deduction for qualified overtime wages | Deduct up to $12.5K overtime pay (joint: $25K); through 2028 |
| Standard Deduction | $13,850 (single), $27,700 (joint), indexed | $15,750 (single), $31,500 (joint), plus $750 boost through 2028 | $750 boost ends after 2028 |
| SALT Deduction Cap | $10,000 cap | $40,000; phased out above $500K AGI | Cap reverts after 5 years |
| Senior Deduction | No special senior deduction beyond standard deduction increase | Additional deduction for seniors | Deduct up to $6K; available through 2028 |
| Auto Loan Interest Deduction | No deduction for personal auto loan interest | Deduction for interest on U.S.-assembled vehicle loans | Deduct up to $10K annually; income limits apply; through 2028 |
| Child Tax Credit | $2,000 per child; partially inflation-indexed | Increase to $2,200 per child | Inflation-indexed; effective immediately |
| Trump Accounts | No such accounts existed | $1,000 per newborn + $5K/year contribution cap | Pilot program 2025–2028 |
| Policy Area | 2024 Provision | New 2025 Provision | Details & Effective Dates |
| Education & Student Loans | No federal caps; loan forgiveness and IDR in effect | Loan caps & voucher credits | Grad loans $20.5K/year; professional $50K/year;
K–12 voucher credit begins 2027 |
| Qualified Business Income (QBI) Deduction (199A) | 20% deduction through 2025 | 23% deduction, made permanent | January 1, 2025, made permanent |
| Qualified Small Business Stock (QSBS) Exclusion (Sec. 1202) | Gain exclusion cap $10M; 5-year holding period; $50M asset test | Gain exclusion cap $15M (indexed); phased holding periods (3/4/5 years); $75M asset test | July 4, 2025 (applies to stock issued after this date) |
| Bonus Depreciation | 60% in 2025; phasing out by 2027 | 100% for property placed in service 2025–2029 | January 2025 – 2029 |
| Section 179 Expensing | $1.16M limit; $2.89M phase-out | $2.5M limit; $4M phase-out; inflation-adjusted | Permanent |
| Energy & Clean Tech | Full IRA clean energy credits in place | Phase-out of IRA clean energy credits | Credits end for projects not started by 2026–27 |
| Estate/Gift Taxes | 2024 exemption approx. $13.6M | Increased exemption to $15M (indexed) | January 1, 2026 |
| Medicaid Reforms | Annual redeterminations; no federal work requirements | Work/eligibility checks; provider tax cuts | 6-month redeterminations; $1T+ in cuts |
| SNAP Reforms | Work requirements applied to 18–54; more generous federal share | Work requirement for ages 18–64; state cost-sharing increase | 80 hours/month work requirement; reduced federal share |
| Medicare Cuts | No large cuts; ACA rules applied | $500B in reductions; restricts non-citizen eligibility | Phased over 8 years |
Individual Tax Planning
Several provisions create near-term tax opportunities for individuals and families:
- SALT Deduction Cap raised to $40,000, though phased out at higher incomes.
- Temporary deductions for tip and overtime income through 2028.
- Auto Loan Interest deduction for new, U.S.-assembled cars through 2028.
- New above-the-line Charitable Deduction, permanent.
While some of these benefits are temporary or income-limited, others may create ongoing tax savings. Strategic timing will be important.
Estate & Gift Tax Planning
Beginning in 2026, the lifetime estate and gift tax exemption increases to $15 million per person ($30 million per couple), indexed for inflation. The generation-skipping transfer (GST) exemption rises accordingly. Importantly, these higher exemptions are permanent, offering greater certainty for long-term planning.
This opens new opportunities for wealth transfer and gifting, but careful execution is essential to avoid unintended tax consequences.
Business Tax Planning
Whether you’re planning for transition, reinvesting in growth, or refining your structure, several key provisions benefit closely held businesses:
- QBI Deduction increases to 23% and becomes permanent.
- QSBS capital gain exclusion for qualifying stock in C-Corporation expanded.
- Bonus Depreciation restored at 100% for property placed in service from 2025 through 2029.
- Section 179 Expensing limit increases to $2.5 million, inflation-adjusted.
- Business Interest Deduction returns to an EBITDA-based cap (2025–2029).
- Excess Business Loss Limitation is made permanent; disallowed losses convert to NOLs.
Now is a good time to revisit entity selection, compensation strategies, and capital investment plans.
What You Can Do Now
- Review Your Estate Plan – Align gifting and legacy strategies with the new higher exemptions.
- Reassess Your Business Structure – Maximize capital gains exclusion on sale, pass-through and expensing opportunities.
- Plan Time-Sensitive Moves – Act now to take advantage of deductions that expire after 2028.
- Enhance Charitable Giving – Explore ways to leverage the new above-the-line deduction.
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