July 2025 | Key Tax Provisions in the One Big Beautiful Bill Act

On July 4^th, 2025, President Trump signed the “One Big Beautiful Bill Act” (OBBB), a sweeping $3.8 trillion reconciliation package that includes a broad array of tax provisions affecting individuals, businesses, and international taxpayers. We want to highlight key provisions that may affect your tax planning.

Individual Income Tax Provisions

·         Permanent Extension to Lower Tax Rates and Brackets – the bill made permanent the individual income tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA) including lower individual tax brackets. The top marginal rate remains at 37%, and inflation adjustments are retained for all but the top bracket.

·         Standard Deduction – permanently increases the standard deduction effective as of Jan. 1, 2025. Single individuals and married individuals filing separately will have a $15,750 deduction and joint filers will have a $31,500 deduction.

·         Charitable Deduction for Non-Itemizers (Cash deductions only) – the bill creates a charitable contribution deduction of $1,000 for single filers or $2,000 for joint filers. The deduction is permanent and will start after 2025.

·         Estate and Gift Tax Exemption – the increased exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation.

·         SALT Deduction Cap – the state and local tax (SALT) deduction cap is increased to $40,000 per household and would be phased out for taxpayers with modified adjusted gross income (MAGI) over $500,000.

·         Enhanced Deduction for Seniors – For 2025-2028, a $6,000 deduction is available for seniors (age 65+) with income below $75,000 ($150,000 for joint filers).

·         Home Mortgage Interest and Insurance Premiums – The bill made permanent the $750,000 Sec. 163(h)(3) acquisition indebtedness limit and includes mortgage insurance premiums as qualified residence interest.

Business Tax Provisions

·         Qualified Business Income Deduction – The Sec. 199A 20% qualified business income (QBI) deduction was made permanent.

·         Bonus Depreciation – 100% expensing (bonus depreciation) for qualified business property is restored for property placed in service from Jan. 19, 2025, through Dec. 31, 2029.

·         Sec. 179 Expensing – The maximum amount a business may expense is increased to $2.5 million, with the phaseout threshold raised to $4 million.

·         Business Interest Deduction – For 2025-2029, the Sec. 163(j) limitation is calculated using earnings before interest, taxes, depreciation, and amortization (EBITDA), rather than earnings before interest and taxes (EBIT).

·         Form 1099 Reporting Threshold – The bill increases the information reporting threshold for certain payments to persons engaged in trade or business and payments of remuneration for services to $2,000 in a calendar year (from $600), with the threshold amount to be indexed annually for inflation in calendar years after 2026.

·         Elimination of Most Clean Energy Credits – the affected credits include the clean vehicle credit, alternative fuel refueling property credit, residential clean energy credit, and energy efficient home credits.

How can you prepare?

Our team is available to discuss how these provisions may impact your personal or business tax situation and to help you plan accordingly.

Please do not hesitate to contact us with any questions or to schedule a consultation.