What the One Big Beautiful Bill Act Means for You

Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) brings some of the most sweeping changes to the U.S. tax code in years. Whether you’re a business owner, an employee, or simply trying to plan smartly for your family’s financial future, this law could significantly affect how you approach taxes starting this year.

We’ve summarized the key changes below and included our early planning takeaways. Many of these provisions will have an impact immediately—others require action before certain credits expire.

Planning Tip: Keep in mind that it is currently undetermined how provisions that require specific implementation (e.g. tip and overtime provisions) will be practically applied, and that some (e.g. electric vehicle and energy credits) will be eliminated very quickly.
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We’re closely monitoring how the OBBBA is implemented, exploring the specific details of each provision, and evaluating how these provisions apply to our clients. If you’re on an annual service contract that includes quarterly- and/or year-end tax planning, you’ll be hearing from us directly with tailored recommendations.

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For Individual Taxpayers: What’s New in 2025?

​The new law locks in lower tax rates and introduces a range of new deductions and credits that could help families, workers, and retirees.

Highlights:

• Tax Brackets Made Permanent
  The lower tax rates originally set by the 2017 TCJA (10%–37%) are now permanent. This change simplifies long-term planning and avoids the automatic sunset that was scheduled for 2026.
• Standard Deduction Increases (and Fewer Itemizers)
  • $15,750 (Single)
  • $23,625 (Head of Household)
  • $31,500 (Married Filing Jointly)
    These are now permanent and indexed for inflation, reducing the need to itemize deductions for most filers.
• New Cap on Itemized Deductions for High Earners
  While the old itemized deduction phaseout is gone, taxpayers in the top bracket will only receive a $0.35 tax benefit per $1 deducted.
• Child and Dependent Tax Breaks
  • Child Tax Credit: Increased to $2,200 per child ($1,700 refundable)
  • Dependent Care Credit: Covers 50% of qualifying expenses, phasing out after $75,000 AGI
• New: “Trump Accounts” for Kids
  Tax-free savings accounts seeded with $1,000 for minors, which can be used for education or other approved purposes.
• Car Loan Interest Deduction
  Deduct up to $10,000/year in interest on loans for U.S.-assembled vehicles (2025–2028). Phases out above $200K (MFJ).
• Tip & Overtime Deductions (New!)
  • Tip Income: Deduct up to $25,000 through 2028 (phased out above $150K single/$300K MFJ).
  • Overtime: Deduct up to $12,500 in qualified overtime pay through 2028 (subject to MAGI phaseouts).
• Senior Bonus Deduction
  An extra $6,000 deduction for taxpayers aged 65+, phased out above $75K/$150K AGI.
• Mortgage & Miscellaneous Deductions
  • Mortgage interest cap of $750K made permanent.
  • Mortgage insurance premiums now deductible.
  • Unreimbursed employee expenses and similar miscellaneous deductions are permanently eliminated.

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For Business Owners: Opportunities & Deadlines

Business-related tax changes in the OBBBA are expansive and largely favorable—especially for small and mid-sized business owners in service, hospitality, real estate, and development.

Key Business Provisions:

• QBI Deduction (Sec. 199A): Made Permanent
  • 20% deduction for pass-through income remains in place.
  • Expanded income thresholds:
    • Phase-in starts at $150K MFJ / $75K Single
    • Phaseout ends at $250K/$125K
  • Minimum $400 deduction for QBI over $1,000
• Excess Business Loss Limits: Now Permanent
  Losses above the allowable limit convert to NOLs and carry forward, restricting how large losses can offset non-business income.
• Bonus Depreciation: 100% Expensing Stays
  Immediate full write-off of qualifying property placed in service after Jan. 19, 2025.
• Sec. 179 Expensing Expanded
  • Deduction cap raised to $2.5 million
  • Phase-out starts at $4 million
• Employer Credits for Childcare & Paid Leave
  • Childcare Credit: 40% of qualified expenses, capped at $600K for small businesses
  • Paid Leave Credit: Permanently extended
• R&D Expenses: Fully Deductible Again
  Immediate expensing is restored for domestic R&E, retroactive to 2022

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Thinking About Clean Energy or an EV? Act Fast.

Several energy-related credits are phasing out quickly, creating a short window of opportunity in 2025. If you're considering a green retrofit or electric vehicle purchase, now’s the time.

Expiring Federal Credits:

• Electric Vehicles & Solar:
  • Clean vehicle and used EV credits end Sept. 30, 2025
  • Residential Clean Energy Credit (30%) expires Dec. 31, 2025
• Commercial Energy Incentives:
  • Sec. 179D (building efficiency) and Sec. 45L (energy-efficient homes) both phase out by June 30, 2026​

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Simplified Reporting & Compliance Relief

​Some welcome administrative relief is on the way for small businesses and gig workers.
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• 1099-K Thresholds Rolled Back
  • The $600 rule is gone
  • Reverts to $20,000 AND 200 transactions—less filing burden for online sellers
• General 1099 Reporting Threshold Increased
  • Now $2,000 for forms like the 1099-NEC, indexed for inflation after 2026

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Industry-Specific Highlights 

Real Estate & Development:

• Bonus depreciation & Sec. 179 caps support aggressive write-offs on new construction and renovations
• Opportunity Zones made permanent (with tighter oversight starting 2027)
• Energy credits expire mid-2026—accelerate projects now to qualify

Hospitality & Restaurants:

• Take advantage of tip income and overtime pay deductions (through 2028)
• Upgraded Sec. 179 caps can cover FF&E purchases
• Employer-provided childcare credit capped at $600K
• Energy-efficiency credits disappear by mid-2026—plan retrofits accordingly

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Professional Services (Legal, Accounting, Consulting):

• QBI thresholds expanded, helping more high-income firms qualify
• $40K SALT deduction cap with MAGI phaseout helps in high-tax states
• New $2,000 above-the-line charitable deduction
• Increased 1099 thresholds reduce compliance friction for firms with contractors

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What Should You Do Now?

The OBBBA offers new planning opportunities—and some fast-approaching deadlines.

For Individuals:

• Revisit withholding or estimated taxes for 2025
• Evaluate whether you’ll benefit more from new deductions or credits
• Act quickly on electric vehicle or clean energy plans

​For Businesses:

• Consider accelerating fixed asset purchases to take advantage of 100% expensing
• Evaluate QBI eligibility under the new income thresholds
• Maximize use of childcare and paid leave credits

Let’s Talk Strategy

We’re already working behind the scenes to adapt client plans to the new law. If you're a current client who is contracted for year-end tax planning, expect targeted outreach from us this fall. Not yet working with us for year-end tax planning? Now’s the time to get proactive.