On July 4, 2025, President Trump signed into law the One Big Beautiful Bill (OBBB)—a sweeping tax reform package that affects individuals, businesses, and estates. This legislation makes permanent many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introduces new opportunities and challenges for tax planning.

We’ve summarized the most impactful changes below, with key changes for businesses first, and key changes for individuals second.

 
Key changes for businesses:

Qualified Business Income (QBI) deduction: The Act makes this deduction permanent. It also sets a minimum deduction for active QBI for “applicable taxpayers” at $400. If your aggregate QBI from all active trades or businesses is at least $1,000, you will receive a minimum deduction of $400. Also, the phase-in amounts are increased from $50,000 to $75,000 for single filers and from $100,000 to $150,000 for joint filers. More taxpayers will be able to claim the deduction, with fewer taxpayers in service businesses being phased out.

Bonus depreciation: The Act makes additional first-year (bonus) depreciation for certain qualified property permanent at 100% (under prior law, it was to phase out to zero). This provision is effective for property acquired after Jan. 19, 2025. There is also a new 100% bonus depreciation provision for “qualified production property” (QPP, which is certain non-residential real property used in the manufacturing, production or refining of certain tangible personal property). This QPP provision is effective for property placed in service after July 4, 2025.

179 Expensing limits: For property placed in service after 2024, the Code Sec. 179 expensing limits are increased to $2,500,000 and the phasedown threshold is increased to $4,000,000 (both subject to inflation adjustments).

R&E expenditures: Immediate deduction of domestic research or experimental expenses paid or incurred in 2025 is allowed. However, research or experimental expenses attributable to research that is conducted outside the United States will continue to be capitalized and amortized over 15 years. 

Excess business loss permanency: The excess business loss limitation is made permanent, and the existing treatment of loss carryforwards is maintained.

Business interest deduction: The interest expense limitation is calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), rather than earnings before interest and taxes (EBIT).

Third-party network transaction reporting threshold: Form 1099-K, Payment Card and Third Party Network Transactions, reporting reverts back to previous rules where reporting is required if transactions exceed $20,000 and the aggregate number of transactions exceeds 200.

Form 1099 reporting threshold: The information reporting threshold for payments for services increases to $2,000 in a calendar year (up from $600) in 2026, and the threshold amount will be indexed annually for inflation starting in 2027.

Renewed Opportunity Zones: Opportunity zones provisions are made permanent, but with several changes, including narrowing the definition of “low-income community.” The changes will generally take effect in 2027.

Clean energy and IRS credits: Several clean energy credits from the Inflation Reduction Act (IRA) are terminated, including the energy efficient commercial buildings deduction, energy efficient home improvement and new energy efficient home credits, residential clean energy credit, and clean vehicle credits. The Act eliminates the 5-year MACRS classification for energy property for construction that begins after 2024. It also terminates the credit for wind energy components produced and sold after Dec. 31,2027, and subjects pre-Act applicable critical minerals to a new phaseout schedule and tightens the rules regarding foreign entities. The credit for EV chargers terminates for property placed in service after June 30, 2026.

Exclusion of gain on the sale or exchange of qualified small business stock (QSBS): The Act provides that gain on the “applicable percentage” (50% for stock held for 3 years, 75% for stock held for 4 years, 100% for stock held for 5 years) is eliminated for QSBS acquired after July 4, 2025. Also, the gain exclusion threshold is increased from $10 million to $15 million and the $50 million aggregate gross asset limit is increased to $75 million (subject to inflation adjustments).

Gain on the sale of certain farmland property: For sales or exchanges occurring after July 4, 2025, sellers of qualified farmland property may elect to pay capital gains tax on the sale in four equal annual installments. The first payment is due with the return for the year in which the sale occurs, with the remaining payments being due with the successive years’ returns (but if a payment is missed, the balance is due immediately).

Corporate charitable contributions: The Act imposes a new 1% floor (in addition to the 10% ceiling) on corporate charitable deductions for post-2025 tax years.

Enhanced manufacturing investment credit: The advanced manufacturing investment credit (also known as the semiconductor credit or the CHIPS credit) on qualified investments in an advanced manufacturing facility built before Jan. 1, 2027 is increased to 35% (up from 25%) for property placed in service after 2025.

International taxation: There are changes to rules for foreign-derived intangible income, global intangible low-taxed income, and base-erosion and anti-abuse tax that are beyond the scope of this newsletter.

 
Key changes for individuals:

 
Permanent extension of lower tax rates and brackets: The OBBB generally makes the tax rates enacted in 2017 in the Tax Cuts and Jobs Act (TCJA) permanent. An additional year of inflation adjustment is added for determining the dollar amounts at which the 12% rate bracket ends and the 22% rate bracket begins. The top individual rate will remain at 37%,instead of reverting to 39.6%. The marriage penalty relief for most brackets continues.

Standard deduction: The nearly doubled standard deduction would be made permanent. For 2025, the amounts are $31,500 for joint filers, $23,625 for heads of household, and $15,750 for singles. Because these higher amounts mean fewer taxpayers will benefit from itemizing, consider bunching itemized deductions into a single year to exceed the standard deduction, then take the standard deduction in alternate years.

Child Tax Credit: The nonrefundable child tax credit increases to $2,200 per child beginning in 2025 and the credit amount is indexed for inflation. To maximize these credits, ensure all dependents have the required identification numbers before year-end, and consider managing your income or accelerating deductions if your AGI is near the phase-out range.

Child and Dependent Care Credit: The maximum credit rate increases to 50% of eligible expenses, up to $3,000 for one qualifying individual or $6,000 for two or more. The full 50% rate applies to families with AGI up to $15,000 and gradually phases down to 35% for AGI up to $75,000 ($150,000 for joint filers). To maximize your benefit, be sure to keep thorough records of all qualifying expenses and coordinate with any employer-provided dependent care benefits to avoid missing out on the full credit potential.

New Tax-Deferred Investment Accounts for Children: Taxpayers can open a new tax-deferred investment account for children, called a “Trump account” for each eligible child. Taxpayers can contribute up to $5,000 per year in after-tax dollars for each child, and funds must be invested in a diversified U.S. equity index fund. For children born between Jan. 1, 2025, and Dec. 31, 2028, the federal government will automatically contribute $1,000 to each account. Taxpayers should open the account before their child turns 18 to maximize contributions and secure the government benefit if eligible.

 
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. Review and update estate plans and consider making large lifetime gifts to tax advantage of this higher exclusion.

No tax on tips and overtime: For 2025–2028, above-the-line deductions are created for qualified tips (in certain occupations) and for overtime premium pay, subject to income and occupation limitations.

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. In 2030, the deduction will revert to $10,000.

Home mortgage interest and insurance premiums: The deduction for mortgage interest on home acquisition debt is now permanently capped at $750,000 ($375,000 if married filing separately), rather than increasing to $1 million in 2026 as previously scheduled. If you are considering buying a home, refinancing, or taking out a new mortgage, be aware that interest on debt above $750,000 will not be deductible. Interest on home equity debt used for anything other than the purchase or improvement of your primary or second home remains nondeductible.

Car loan interest deduction: For 2025–2028, up to $10,000 of interest on loans for U.S.-assembled passenger vehicles may be deducted, subject to income phaseouts. To qualify, the loan must be for a new, U.S.-assembled car, SUV, van, pickup, or motorcycle (under 14,000 pounds), secured by a first lien, with the taxpayer as the original owner, and the vehicle’s VIN reported on the tax return. If you’re planning to buy a new vehicle, consider timing your purchase and loan to maximize deductible interest within the eligible years, and manage your income to stay below the phase-out thresholds for the largest benefit. 

Charitable deduction for non-itemizers: An above-the-line deduction is added for charitable contributions that starts in 2026 ($1,000 for single filers, $2,000 for joint filers).

Contributions to Scholarship-Granting Organizations: New for tax years ending after Dec. 31, 2026, individual taxpayers can claim a federal income tax credit of up to $1,700 per year for cash contributions to qualifying scholarship-granting organizations (SGOs) in participating states. To maximize this benefit, confirm your state’s participation and ensure the SGO is on the IRS-approved list before contributing.

Wagering Losses: Starting in 2026, only 90% of your wagering losses can be deducted against your winnings, even if your losses equal or exceed your winnings. To maximize your deductions, consider realizing wagering losses in 2025 before the new rule takes effect, and keep detailed records of all activity.

Miscellaneous Itemized Deductions: The Act permanently eliminates miscellaneous itemized deductions for individual taxpayers. There is an exception for educator expenses. There is no longer a specific dollar limit for the educator expense deduction if they work at least 900 hours per year.

 
Individuals’ Charitable Deductions Cap: There is a new cap on the tax benefits for those in the 37% marginal tax bracket. The benefit of the charitable deduction will be at the 35% rate. Donors in higher tax brackets who are considering a significant philanthropic gift may want to think about accelerating their gift to 2025 to maximize their deduction under before the new cap goes into effect.

Individuals’ Charitable Deductions Floor: There is a new floor on deductions for itemizers. They will only be able to claim a tax deduction to the extent that their qualified contributions exceed 0.5% of their AGI. For example, a couple with AGI of $300,000 could only deduct charitable donations in excess of $1,500.

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).

Moving expense deduction: The deduction is permanently terminated except for those in the Armed Forces.

Casualty loss deduction for personal casualties: Personal casualty loss deductions are permanently limited to losses from federally declared disasters (and now certain state-declared disasters). If you experience a loss due to a qualifying disaster, be sure to keep detailed records.

Qualified Higher Education Expenses: Changes to 529 savings plans allow families to use tax-free distributions for a much broader range of K-12 education expenses including not just tuition, but also curriculum, books, online materials, tutoring, standardized test fees, dual enrollment, and educational therapies for students with disabilities. Starting in 2026, the annual limit for K-12 distributions doubles from $10,000 to $20,000 per beneficiary. To maximize tax savings, consider timing 529 withdrawals to match qualified expenses within the same tax year, and coordinate with other education tax credits to avoid overlap.

 
Higher Education Expenses for 529 Accounts: 529 plan distributions can now be used tax-free for a wider range of education expenses, including not only college costs but also “qualified postsecondary credentialing expenses.” This means you can use 529 funds for tuition, fees, books, supplies, and equipment required for enrollment in recognized certificate, licensing, or apprenticeship programs even if they are not traditional degree programs.

Eligibility to Enroll in Qualified Health Plan: Starting in tax years after 2027, you can only claim the premium tax credit (PTC) for months when the health insurance Exchange has verified that you are eligible to enroll in a qualified health plan (QHP) and to receive advance PTC payments. To avoid losing your credit, be sure to file your federal tax return on time each year. Promptly report any changes in income, family size, or other circumstances to the Marketplace within 30 days, and respond quickly to any requests for information.

ABLE Accounts: The Act permanently provides for additional contributions to Achieving a Better Life Experience (ABLE) accounts for employed individuals with disabilities. It also adjusts the base limit amount by one year for inflation. The Act also permanently allows beneficiaries who make qualified contributions to their ABLE account to qualify for the Saver’s Credit. To maximize tax benefits, ensure the designated beneficiary personally makes contributions by year-end to qualify for the Saver’s Credit, which is now permanently available for ABLE contributions and will increase to a maximum of $2,100 starting in 2027.

Individual Alternative Minimum Tax Exemption Amounts: The AMT exemption amounts are permanently increased for 2026 and beyond, but the phaseout rate for higher-income taxpayers doubles from 25% to 50%. Taxpayers should review their AMT exposure and consider strategies such as timing income or exercising options in lower-income years to avoid unexpected AMT liability.

Remittance Transfers: Starting in 2026, a new 1% excise tax will apply to remittance transfers from U.S. senders to recipients in foreign countries. Transfers funded with cash or through non-U.S. payment apps may be subject to the tax, so plan ahead and use the exempt methods (i.e., the remittance transfer is withdrawn from a financial institution governed by Title 31, Chapter 53 or funded with a U.S.-issued debit or credit card) whenever possible to minimize your tax liability on international money transfers. This provision is effective for transfers made after Dec. 31, 2025, so review your remittance practices before year-end to take advantage of these exceptions and avoid unnecessary taxes.

 
Adoption Credit: Starting in 2025, the adoption credit is enhanced to include a refundable portion of up to $5,000 per child (indexed for inflation). This means eligible taxpayers can receive up to $5,000 as a refund even if they owe no tax, making the credit more valuable for lower-income families. To maximize this benefit, keep detailed records of all qualified adoption expenses, ensure you have a taxpayer identification number for the child, and file Form 8839 in the year the adoption is finalized.

 
We’ll continue to monitor developments closely and provide updates and guidance as new details become available. Our goal is to ensure you’re informed, prepared, and supported — every step of the way.

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

Please don’t hesitate to contact us with any questions or to schedule a consultation.