Key Tax Highlights from the One Big Beautiful Bill Act (OBBBA)

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law — a sweeping reconciliation package that delivers significant tax reforms affecting individuals, business owners, and international taxpayers.

As your trusted advisors, we’re breaking down the key provisions to help you understand what’s changing — and what steps you may want to consider now.

For Individuals & Families

• Permanency of Lower Tax Rates

  The individual tax brackets and lower rates originally enacted under the 2017 Tax Cuts and Jobs Act (TCJA) are now permanent, with subsequent annual inflation adjustments.

• Standard Deduction (Permanent Starting 2025)

  • Single / MFS: $15,750
  • Head of Household: $23,625
  • Married Filing Jointly: $31,500

Subsequent annual inflation adjustments.

• Child Tax Credit
  • Increased to $2,200 per child beginning in 2025, with $1,400 refundable.

Subsequent annual inflation adjustments.

• Estate & Gift Tax Exemption (Starting in 2026)

  • $15 million per individual
  • $30 million for married couples

Indexed annually going forward.

• State and Local Tax (SALT) Deduction Cap

  Increased to $40,000 per household, with phaseouts beginning at $500,000 of MAGI, but not below $10,000. The cap reverts to $10,000 in 2030 unless extended.

• Charitable Deduction for Non-Itemizers

  Starting in 2026, taxpayers can take an above-the-line deduction of:

  • $1,000 (individuals)
  • $2,000 (joint filers)

• New Deductions (2025–2028)

  • Tips & Overtime Pay: Allows up to a $25,000 deduction for qualified tips received in certain occupations with phase outs.
  • Senior Deduction (2025-2028): Adds a $6,000 bonus deduction for taxpayers age 65+ earning less than $75K (single) or $150K (joint).
  • Car Loan Interest (2025-2028): Up to $10,000 deductible for interest on new car loans of U.S.-assembled vehicles, with phaseouts.

• Other Key Provisions

  • Moving Expenses: Deduction eliminated (except for Armed Forces).
  • Mortgage Interest & Insurance Premiums: $750K cap and home equity loan exclusion made permanent.
  • Casualty Losses: Expanded to include state-declared disasters.
  • Permanently Extended Credits: Includes adoption, employer-provided childcare, paid leave, and certain education credits.

For Business Owners

• QBI Deduction Made Permanent

The popular 20% Qualified Business Income deduction is now a permanent feature of the tax code.

• Bonus Depreciation Restored

100% bonus depreciation returns for qualified property placed in service after Jan. 19, 2025.

• Section 179 Expensing

  • Cap: $2.5 million
  • Phaseout deduction begins at $4m of total assets placed in service.
  • Both indexed for inflation starting in 2026.

• Research & Experimental Expenses

  • Immediate expensing allowed for domestic R&E costs beginning in 2025.
  • Foreign R&E must still be amortized over 15 years.

• Business Loss & Interest Deductions

  • Excess Business Loss Limitation made permanent, with carryforward treatment retained.
  • Business Interest Deduction: Reverts to EBITDA basis — a more generous formula than EBIT. No limitation.

• International Tax Highlights (2026 Onward)

  • FDII Deduction: Reduced to 33.34%
  • GILTI Deduction: Reduced to 40%
  • BEAT Rate: Increased to 10.5%

• Information Reporting Updates

  • 1099-K (Third-Party Payments): Threshold reverts to $20,000 and 200 transactions.
  • 1099-MISC and 1099-NEC (Service Providers): Threshold raised to $2,000 starting in 2026, forms filed in 2027 (indexed for inflation annually).

Other Notable Provisions

• Opportunity Zones

Extended permanently, but with a narrower definition of eligible “low-income communities.” Changes begin in 2027.

• Clean Energy Credits

Several clean energy incentives introduced by the Inflation Reduction Act have been repealed under OBBBA.

What Should You Do Now?

We recommend a phased approach to planning — balancing near-term action with long-term strategy.

• Short-Term (2025–2026):

  • Review updated rates and deductions
  • Adjust tax payments and withholding
  • Evaluate bonus depreciation and R&E timing

• Mid-Term (12–18 Months):

  • Review Opportunity Zone investments
  • Monitor charitable giving strategy

• Long-Term (2027+):

  • Consider estate & gift tax opportunities
  • Prepare for SALT cap reversion in 2030
  • Reassess business structures and succession plans

Let’s Talk Strategy

Tax reform brings both opportunities and complexity. Whether you’re an individual taxpayer, business owner, or investor, customized planning is essential to optimizing your financial position.

Ready to talk? Contact your Beaird Harris advisor or reach out to our team to schedule a consultation. We’re here to help you navigate what’s new, what’s next, and what matters most — your goals, your plan, and your peace of mind.