On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The new law includes a broad array of tax provisions affecting individuals and businesses. Below are highlights of the key provisions and preliminary insights into how they may affect your tax planning. Please contact us to discuss your situation so we can develop a customized plan. We will continue to closely monitor any potential regulatory guidance as it’s developed from the IRS and update you accordingly. States may follow suit, but each will determine which of these provisions, if any, they will incorporate into their state law.

Individual income tax provisions

· Permanent extension of lower tax rates and brackets: The OBBBA generally makes the tax rates enacted in 2017 in the Tax Cuts and Jobs Act (TCJA) permanent. An additional year of inflation adjustment is added for determining the dollar amounts at which the 12% rate bracket ends and the 22% rate bracket begins.

· Standard deduction: TCJA also nearly doubled the standard deduction which is now made permanent by the OBBBA. Effective for 2025, the amounts are as follows:

o Single & Married Filing Separately (MFS): $15,750 (indexed)

o Head of Household (HoH): $23,625 (indexed)

o Married Filing Jointly (MFJ): $31,500 (indexed)

· Child Tax Credit: The nonrefundable child tax credit increases to $2,200 per child beginning in 2025, and the credit amount is indexed for inflation.

· Estate and gift tax exemption: The TCJA increased exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation. In addition, the OBBBA aligned the generation-skipping transfer tax exemption with the estate tax exemption. It also retained the TCJA's tax brackets for trusts and estates.

· SALT deduction cap: The state and local tax (SALT) deduction cap is increased to $40,000 per household and will be phased out for taxpayers with modified adjusted gross income (MAGI) over $500,000. In 2030, the deduction is scheduled to revert to $10,000.

· Charitable deduction for non-itemizers: An above-the-line deduction that starts in 2026 is added for charitable contributions ($1,000 for single filers, $2,000 for joint filers).

· No tax on tips and overtime: For 2025–2028, above-the-line deductions are created for qualified tips (in certain occupations) and for qualified overtime compensation, subject to income and occupation limitations. The deduction for qualified tips is limited to $25,000. The deduction for qualified overtime compensation is limited to $12,500 single or $25,000 for married taxpayers filing a joint return. Both provisions are subject to MAGI phaseouts starting at $150,000 ($300,000 MFJ). NOTE: Qualified overtime pay must be included on the employee’s Form W-2 or the non-employee’s Form 1099-NEC.

· Enhanced deduction for seniors: For 2025-2028, a $6,000 deduction per individual ($12,000 for MFJ) is available for seniors (age 65+) with income below $75,000 ($150,000 for joint filers).

· Car loan interest deduction: For 2025-2028, up to $10,000 of interest on loans for U.S.-assembled passenger vehicles may be deducted, subject to income phaseouts.

· EV Credit: Taxpayers who buy electric vehicles will lose the $7,500 EV tax credit at the end of September 2025. Also, after June 30, 2026, individual clean energy credits will be terminated for EV-charging equipment.

· Moving expense deduction: The deduction is permanently terminated except for those in the Armed Forces.

· Home mortgage interest and insurance premiums: The $750,000 limit on the treatment of mortgage insurance premiums as qualified residence interest is made permanent. The exclusion of home-equity indebtedness from the definition of qualified residence interest permanent, and certain mortgage insurance premiums on acquisition indebtedness are treated as qualified residence interest.

· Casualty loss deduction for personal casualties: The limitation on personal casualty loss deductions is made permanent, however, a provision is added to include state-declared disasters.

· Other deductions and credits: Several other deductions and credits, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits are made permanent.

· Trump Accounts: Tax-favored Trump accounts for children are created. The accounts operate in a similar manner to individual retirement accounts. A pilot program will seed the accounts of children born after December 31, 2024, and before January 1, 2029, who are U.S. citizens at birth, with $1,000.

Business tax provisions

· QBI deduction: The qualified business income (QBI) deduction is made permanent and the deductible amount for each qualified business would remain at 20%.

· Bonus depreciation: Under TCJA, bonus depreciation was 40% for 2025 but is now permanently restored at 100% expensing (bonus depreciation) for qualified property placed in service after Jan. 19, 2025.

· Sec. 179 expensing: The maximum amount a business may expense for qualifying expenses is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.

· R&E expenditures: Immediate deduction of domestic research or experimental expenses paid or incurred in 2025 is allowed. However, research or experimental expenses attributable to research that is conducted outside the United States will continue to be capitalized and amortized over 15 years.

· Excess business loss permanency: The excess business loss limitation is made permanent, and the existing treatment of loss carryforwards is maintained.

· Business interest deduction: The interest expense limitation is calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), rather than earnings before interest and taxes (EBIT).

· Third-party network transaction reporting threshold: Form 1099-K, Payment Card and Third-Party Network Transactions, reporting reverts back to previous rules where reporting is required if transactions exceed $20,000 and the aggregate number of transactions exceeds 200.

· Form 1099 reporting threshold: The information reporting threshold for payments for services increases to $2,000 in a calendar year (up from $600) in 2026, and the threshold amount will be indexed annually for inflation starting in 2027.

· Renewed Opportunity Zones: Opportunity zones provisions are made permanent, but with several changes, including narrowing the definition of “low-income community.” The changes will generally take effect in 2027.

· Gain from Sale of Qualified Farmland Property: New Code Sec. 1062 allows taxpayers to elect to pay taxes on gains from the sale or exchange of qualified farmland property to a qualified farmer in four equal annual installments.

· Clean energy and IRS credits: Several clean energy credits from the Inflation Reduction Act (IRA) are terminated.

This article highlights some major features in the OBBBA, but the new law includes many other tax provisions which may affect you personally or your business. Please reach out to us if you read or hear of new provisions that are not included above that may be beneficial to you before you make any decisions as things related to the new law are still being reviewed.

We’re here to help

Our team is available to discuss how these provisions may impact your personal or business tax situation and to help you plan accordingly. Please don’t hesitate to contact us with any questions or to schedule a consultation.