07/17/2025
Tax Law Changes Under the One Big Beautiful Bill Act (OBBBA)
The One Big Beautiful Bill Act (OBBBA), signed into law by President Trump on July 4, 2025, introduces significant and permanent changes to the U.S. tax code. Expanding upon provisions from the Tax Cuts and Jobs Act (TCJA), the OBBBA affects both individuals and businesses with its wide-reaching reforms. This document consolidates and summarizes the key highlights of the legislation, combining insights from official legislative summaries and expert tax commentary.
Key Tax Changes for Individuals:
• Permanent extension of TCJA’s individual tax brackets (10% to 37%) and upward adjustments to tax brackets to reduce inflation impact.
• Standard deduction permanently increased with inflation adjustments. For 2026: $16,550 (single), $33,100 (married); plus a supplemental deduction of $1,000 (single), $2,000 (married) for 2025–2028.
• Child Tax Credit increased to $2,200 and made permanent with a $1,400 refundable portion. A $500 credit for non-child dependents is also available. Claimants must have valid SSNs.
• Deductions through 2028 for tip income (up to $25,000) and overtime pay (up to $12,500), subject to income-based phaseouts.
• Additional deduction for seniors age 65+ (2025–2028): $6,000 (single), $12,000 (married).
• Section 529 plans expanded to cover more educational expenses starting in 2025 or 2026, depending on the expense.
• Elimination of clean energy tax credits, including those for residential improvements and new/used electric vehicles after Sept. 30, 2025.
Key Tax Changes for Businesses:
• 100% bonus depreciation permanently reinstated for qualified assets placed in service after Jan. 19, 2025.
• Special 100% depreciation introduced for Qualified Production Property (QPP) in manufacturing and refining.
• Section 179 expensing limit raised to $2.5 million with a $4 million phase-out, adjusted for inflation.
• Section 199A Qualified Business Income (QBI) deduction made permanent with more favorable calculation methods and inflation-indexed floors.
• Business interest deduction rules liberalized by returning to pre-2022 calculations, including addbacks for depreciation, amortization, and depletion.
• Excess business loss limitations made permanent with inflation-indexed thresholds.
• Expansion of Qualified Small Business Stock exclusions for greater tax-free investment gains.
• Enhanced enforcement of Employee Retention Credit to prevent fraud.
The One Big Beautiful Bill Act includes sweeping and detailed tax changes that will affect nearly all taxpayers. To optimize tax outcomes, individuals and business owners please reach out to us at
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