The One Big Beautiful Bill Act: What You Need to Know About the Latest Tax Law Changes OBBBA

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law, bringing a wave of significant changes to federal tax legislation. This comprehensive package impacts individuals, businesses, and even international taxpayers.

We’re breaking down the key provisions to help you understand how these updates might affect your tax planning.

Key Individual Tax Provisions

Many of the Tax Cuts and Jobs Act (TCJA) rates and provisions are now permanent, offering more stability for taxpayers:

Permanent Lower Tax Rates and Brackets: The tax rates from 2017 are now permanent, with an inflation adjustment for certain brackets in 2025.
Permanent Standard Deduction: The nearly doubled standard deduction amounts are now set permanently. For 2025, these are:
- Single & MFS: $15,750
- Head of Household: $23,625
- Married Filing Jointly: $31,500
Increased Child Tax Credit: The nonrefundable Child Tax Credit rises to $2,200 per child starting in 2025 and will be indexed for inflation.
Boosted Estate and Gift Tax Exemption: This exemption is permanently increased to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation.
SALT Deduction Cap Increase: The state and local tax (SALT) deduction cap goes up to $40,000 per household, with a phase-out for higher earners. This will revert to $10,000 in 2030.
New Charitable Deduction for Non-Itemizers: Starting in 2026, you can deduct charitable contributions above-the-line ($1,000 for single, $2,000 for joint filers).
Temporary Deductions: From 2025-2028, new deductions are available for qualified tips, overtime pay (with limitations), and an enhanced $6,000 deduction for seniors (age 65+ with income below certain thresholds). You can also deduct up to $10,000 in interest on loans for U.S.-assembled passenger vehicles.
Permanent Changes to Other Deductions: The moving expense deduction is largely terminated (except for Armed Forces). Limits on home mortgage interest and personal casualty loss deductions (now including state-declared disasters) are made permanent. Several other credits, like the adoption credit and employer-provided childcare credit, are also made permanent.

Important Business Tax Provisions

Businesses also see significant changes and permanency for key deductions:

Permanent QBI Deduction: The Qualified Business Income (QBI) deduction remains at 20% and is now permanent.
Restored Bonus Depreciation: 100% expensing for qualified property is back for property placed in service after January 19, 2025.
Increased Section 179 Expensing: The maximum expense for qualifying property rises to $2.5 million, with a phase-out threshold of $4 million (indexed after 2025).
Immediate R&E Expense Deduction: Domestic research and experimental expenses can be immediately deducted in 2025.
Permanent Excess Business Loss Limitation: This limitation is now permanent, with existing loss carryforward rules maintained.
Business Interest Deduction Calculation Change: The interest expense limitation will now be calculated using EBITDA (earnings before interest, taxes, depreciation, and amortization) instead of EBIT.
Changes to International Tax: Beginning in 2026, the deduction percentages for FDII (foreign-derived intangible income) and GILTI (global intangible low-taxed income) are reduced. The BEAT (base-erosion and anti-abuse tax) rate increases from 10% to 10.5%.
Higher Reporting Thresholds: The Form 1099-K reporting threshold reverts to $20,000 and 200 transactions. The Form 1099 reporting threshold for services increases to $2,000 in 2026.
Renewed Opportunity Zones: These provisions are made permanent with changes, including a narrower definition of “low-income community,” effective in 2027.
Clean Energy Credit Terminations: Several clean energy credits from the Inflation Reduction Act are terminated.