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Special July Newsletter

One Big Beautiful Bill Act

(OBBBA)

Preview of key tax provisions in the House’s One Big Beautiful Bill Act

On July 4, 2025, the president signed the One Big Beautiful Bill Act (OBBBA) into law. We would like to highlight the key provisions of this legislation and offer preliminary insights into how they may impact your tax planning. In the coming weeks and months, as the IRS releases guidance on specific provisions of the OBBBA, we will continue to analyze the implications and provide updates. Our goal is to ensure you remain informed and well-positioned to make timely and strategic tax decisions.

Individual income tax provisions

Permanent extension of lower tax rates and brackets: The bill makes permanent the individual income tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA), including lower individual tax brackets. The current seven-bracket structure: 10%, 12%, 22%, 24%, 32%, 35% and 37%. All brackets continue to be indexed for inflation after 2025.
Standard deduction: The nearly doubled standard deduction was made permanent. Effective as of Jan. 1, 2025: Single & MFS: $15,750 HoH: $23,625 MFJ: $31,500. All will be indexed for inflation.
State and local tax (SALT) deduction cap: For individuals who itemize, the SALT provision increases the deduction limit from $10,000 to $40,000 for 2025 and $40,400 for 2026, followed by 1% increases for 2027, 2028, and 2029. Beginning in 2030, the cap would revert to $10,000. The deduction would be reduced for those with MAGI greater than $500,000 in 2025, $505,000 in 2026, and similar 1% increases thereafter, but not below $10,000. Additionally, there would be no SALT limitation for passthrough entities.
(NEW) Charitable deduction for nonitemizers (Cash deductions only): The bill creates a charitable contribution deduction of $1,000 for single filers or $2,000 for joint-filers for certain charitable contributions. The deduction is permanent; however, it does not begin until 2026.
(NEW) 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).
Child Tax Credit (CTC): The credit has been permanently increased to $2,200 per child under 17, with $1,700 refundable (subject to inflation adjustments).
Other Dependent Credit: The $500 credit is made permanent. This is a non-refundable credit per qualifying dependent who does not qualify for the CTC (e.g., older children, elderly parents).
(NEW) Car loan interest deduction: For 2025-2028 the bill creates a deduction for up to $10,000 of interest on new car loans; the vehicle must be a new, US-assembled passenger vehicle with the vehicle serving as security for the loan. Leased vehicles do not qualify. Subject to income limits.
(NEW) No tax on tips: The bill allows deduction for qualified tips up to $25,000 per taxpayer. The deduction begins to be reduced when the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 for MFJ) and expires on December 31, 2028.
(NEW) No tax on overtime: Allows deduction for qualified overtime compensation up to $12,500 per taxpayer, subject to income limitations. The deduction expires after 2028.
Moving expense deduction: The bill permanently terminates the deduction except for Armed Forces.
Home mortgage interest and insurance premiums: For individuals who itemize, the bill makes permanent the $750,000 acquisition indebtedness limit. The exclusion of home-equity indebtedness from the definition of qualified residence interest also became permanent. Certain mortgage insurance premiums on acquisition indebtedness are treated as qualified residence interest.
Casualty loss deduction for personal casualties: The Sec. 165(h)(5) limitation on personal casualty loss deductions, under which a casualty loss is deductible only to the extent it is attributable to a federally declared disaster, is made permanent. The bill expands the provision to include certain state-declared disasters.
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.
Other deductions and credits: The bill makes permanent or enhances several other deductions and credits, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits.

Business tax provisions

QBI deduction: The Sec. 199A qualified business income (QBI) deduction is made permanent. The deduction remains at 20%, subject to phaseout for specified service trades or businesses (SSTBs). These phase-out amounts are increased.
PTET SALT deduction: Individual SALT deduction is $40,000 for most filers. Additionally, there would be no SALT limitation for pass-through entities.
Bonus depreciation: First year depreciation deduction allowance increased from 40% to 100% of property acquired and placed in service on or after Jan. 19, 2025.
Sec. 179 expensing: The maximum amount a business may expense is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.
(NEW) Qualified production property “manufacturing property:” The bill introduces an elective bonus depreciation allowance for qualified production property where construction begins after January 19, 2025 and before January 1, 2029, and must be placed in service prior Jan. 1, 2031.
Third-party network transaction reporting threshold: The bill reverts to the prior rule for Form 1099-K, Payment Card and Third Party Network Transactions, reporting, under which a third-party settlement organizations (TPSO) are not required to report unless the aggregate value of third-party network transactions with respect to a participating payee for the year exceeds $20,000 and the aggregate number of such transactions with respect to a participating payee exceeds 200.
Form-1099 reporting threshold: The bill increases the information reporting threshold for certain payments to persons engaged in a 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.
Other deductions and credits: The bill includes several other provisions related to deductions and credits that are not highlighted above. If there is a specific provision you're interested in that wasn't covered above, please feel free to contact us for more information.

How you can prepare

We recommend reviewing your current tax strategy in light of these changes. Our team is available to discuss how these provisions may impact your personal or business tax situation and to help you plan accordingly. As the IRS releases additional guidance, we will be better positioned to advise you based on your specific circumstances.