President Trump to sign the "One Big Beautiful Bill" approved by Congress

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After much debate and fanfare, the "One Big Beautiful Bill (OBBB)" was approved by Congress. If all goes according to plan, OBBB will be signed into law by President Trump later today (July 4th).

The purpose of this newsletter is to keep you informed on the major aspects of OBBB which may impact your tax return.

A word of caution - the ink is not yet dry on this legislation and many details have yet to be reviewed and refined. Some of the headline items only apply to certain income levels or have other restrictions. We will be receiving added details and training on OBBB in the coming weeks. As a result, what we share below if based upon information available and understood at this time.

Non-tax Impacts

A major part of OBBB has nothing to do with your tax return other than deciding where the government spends (or does not spend) the taxes we all pay.

OBBB has the following major "non-tax" impacts

Increases spending on military and defense
Increases spending on border and immigration control
Reduces spending on programs like Medicaid and food stamps by tightening eligibility and work requirements
Refines enrollment and eligibility requirements of the Affordable Care Act
Refines federal aid and subsidy limits and eligibility requirements for certain types of student loans
Increases the government debt limit by $5 trillion

Tax Impacts

The other major part of OBBB is substantial tax reform. In general, the OBBB has two categories of tax reform impacts:

Existing Provisions Made Permanent

OBBB avoided the expiration of certain provisions from the 2017 Tax Cut and Jobs Act (TCJA) there were set to expire at the end of 2025 and makes them permanent.

New Tax Provisions

OBBB adds new tax provisions (i.e., no tax on overtime/tips) or enhances existing tax provisions (i.e. higher child tax credit). Some of these new provisions are permanent but many are temporary (and expire at the end of 2028)

See below for a summary of the key tax reform impacts of OBBB

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Highlight of Major Tax Reform Impacts within OBBB

The lower tax rates under TCJA will no longer expire at the end of 2025.
This is likely the most far reaching impact of OBBB as 68% of taxpayers would have seen some level of tax increase if TCJA had expired.
As a result, for most, this will not be a tax reduction from recent years but more an avoidance of what would have been higher taxes going forward.
The higher standard deduction (roughly doubled as part of TCJA) is now made permanent. In addition, the standard deduction is further increased on a temporary basis for tax year 2025 to 2028 as follows:
$750 for single filers and married filing separately
$1,500 for married filing joint filers
$1,125 for Head of Household filers
$6,000 for taxpayers over 65 (on top of existing increases in place but subject to income limitations)
The higher child tax credit deduction under TCJA is now made permanent. In addition, the child credit is further increased by $300 on a temporary basis for tax years 2025 thru 2028.
The $750K mortgage balance limit on the deduction for home mortgage interest is made permanent.
Exclusion of up to $25K of tip income (subject to overall income limits).
Exclusion of up to $12.5K of overtime premium (subject to overall income limits).
Deduction of up to $10K of car loan interest. This is a temporary deduction for tax years 2025 thru 2028 and has income limitations and only applies to vehicles with final assembly in the US.
Increases the SALT (State and Local Tax) deduction limit from $10K to $40K with a phase out above certain income levels.
The higher estate tax exemption under TCJA is made permanent. In addition, it further increases the exemption to $15M in 2025 ($30M for married couples) with cost of living adjustments thereafter.
Repeals several clean energy initiatives. Although the major changes here are to those that impact energy companies building wind or solar farms, the two main impacts to taxpayers are:
The $7.5K EV tax credit is no longer available for vehicles purchases after September, 2025.
The 30% residential energy credit for solar panel installation on a residential home is no longer available after December 2025.
The 20% Qualified Business Deduction (QBI) is now made permanent
The QBI is also increased to 23% in certain situations and it appears this will be temporary.
Restores the 100% bonus depreciation deduction for businesses although for certain asset classes this is temporary for tax years 2025 thru 2028.

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Paper Checks Short Lived

While OBBB has been the primary focus in recent months, there was an executive order (EO) signed by President Trump in March, 2025 that may also impact certain taxpayers.

President Trump signed the EO "Modernizing Payments To and From America's Bank Account" that will essentially eliminate paper checks being issued to or received by the federal government going forward.

This would impact all payments made by the federal government including tax refunds and social security benefits. In addition, it would impact all payments made to the federal government including taxes, fees and fines.

The EO is under review currently (soliciting public comments) and will likely have exceptions (i.e., those without access to a bank account). We will share more information as it becomes available. As drafted, this EO is supposed to take effect for all payment made BY the federal government after September 30, 2025

Enjoy your 4th of July Holiday!