On July 3rd, Congress passed the expansive One Big Beautiful Bill Act (OBBBA) which was signed into law by President Trump on July 4th. This bill is a landmark tax and spending package with 940 pages of text covering a wide range of policy changes. Some of the key provisions include making changes from the 2017 Tax Cuts and Jobs Act (TCJA) permanent along with introducing significant changes for businesses and individuals and redefining international tax and clean energy policy.

Below, we have outlined some of the tax provisions within the Bill impacting businesses and individuals. The highlights below are not intended to be a comprehensive analysis of the Bill.

Key Takeaways at a Glance

  • TCJA extensions made permanent, including 100% bonus depreciation and qualified business income deductions (QBI 20% deduction).
  • Enhanced tax relief for businesses — particularly around interest deductions, R&D expensing, and pass-through income.
  • Significant international tax reforms, affecting GILTI, FDII, and foreign tax credits.
  • Clean energy incentives scaled back, with phaseouts on many recent credits.
  • Major changes for individuals, including updates to the SALT cap, standard deduction, and child tax credit.
  • Estate and gift tax exemption increased to $15 million (indexed from 2026) and made permanent.
  • New planning opportunities for qualified opportunity zones, small business stock, and charitable giving.

 

Some of the Key Provisions That Businesses Need to Know

Overall, the bill significantly favors business owners by enhancing cash flow and reducing tax liabilities.

  • 100% Bonus Depreciation Returns: Permanently extends and modifies additional first year depreciation on assts purchased. Businesses can again fully expense qualified assets in the year they’re placed in service on or after January 19, 2025.
  • Section 179 Depreciation Expensing: Increases the maximum amount a taxpayer may expense under Sec. 179 to $2,500,000 and increases the phaseout threshold amount to $4,000,000.
  • Business Interest Deduction: Reverts to the more generous EBITDA-based limitation calculation.
  • R&D Expensing: Allows full expenses for domestic R&D from Jan. 1, 2025. Foreign R&D remains at 15-year amortization. In addition, the bill would provide small businesses with the option to apply this change retroactively to 2022 through amended returns. It would also allow taxpayers to accelerate any remaining Sec. 174 deductions (previously capitalized).
  • Pass-Through Deduction (199A): Made permanent, with a wider phase-in range for income thresholds (increasing an additional $50,000 for married filers and $25,000 for single filers). In addition, a new minimum $400 deduction is added for taxpayers with at least $1,000 of QBI.
  • Charitable Giving Limits: A new 1% floor for corporations means only contributions above 1% of taxable income are deductible.
  • Form 1099 Information Reporting: 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.
  • Section 1202 Gain Exclusion on Qualified Small Business Stock (QSBS): The bill modifies the QSBS exclusion to provide a tiered exclusion determined on the years the taxpayer holds the QSBS:
    • 50% exclusion if held for three years;
    • 75% exclusion if held for four years; and
    • 100% exclusion if held for five or more years.
    • The bill also increases eligibility for the exclusion by increasing the eligibility limit on the corporation’s aggregate gross assets at the time of issuance from a $50 million limit to a $75 million limit.

 

Global Tax Rules See Significant Overhaul

OBBBA substantially changes the U.S. approach to international taxation. Below are a few changes to other areas being beyond the scope of this summary:

  • Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI) deductions: The bill reduces from 37.5% to 33.34% (FDII) and from 50% to 40% (GILTI). The bill would also rename GILTI to “net CFC tested income” (NCTI) and FDII to “foreign-derived deduction eligible income” (FDDEI).
  • Foreign Tax Credits (FTC): Increasing deemed paid credits under Section 960 from 80% to 90% along with other changes to the FTC credit calculations.
  • Base Erosion and Anti-Abuse Tax (BEAT) Changes: New permanent 10.5% rate while retaining the existing credit offset impacting the BEAT base.
  • Downward Attribution Restored: Impacts CFC status and reporting obligations for many multinational structures.

 

Major Clean Energy & Sustainability Credits Winding Down

The OBBBA substantially scales back clean energy incentives introduced by the Inflation Reduction Act (IRA):

  • EV, Solar, Wind, and Home Energy Credits are scheduled to terminate between 2025–2027.
  • Sec. 179D, Energy Efficient Commercial Buildings Deduction is also terminated for property that begins construction after June 30, 2026.
  • Hydrogen and Carbon Capture Credits are narrowed, with stricter qualification rules.
  • Energy Generation and Storage Credits allows credits for nuclear, geothermal and energy storage. Provides an increased credit for certain advanced nuclear facilities with various employment threshold requirements.
  • New Transferability Rules for remaining credits give businesses more planning options.

Consider fast-tracking clean energy investments and projects to ensure eligibility before key expiration dates.

 

OBBBA Tax Changes Impacting Individuals

  • Individual Income Tax Rates and Standard Deductions are made permanent where brackets and standard deductions are indexed for inflation. Effective as of Jan. 1, 2025: Single & Married Filing Separate: $15,750, Head of Household: $23,625, Married Filing Joint: $31,500.
  • State and Local Tax (SALT) Cap Increased: The SALT provision retroactively increases the individual 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. Such deduction would also be subject to a phaseout for Modified Adjusted Gross Income greater than $500,000 in 2025, $505,000 in 2026, and similar 1% increases thereafter, but the deduction would not be reduced below $10,000. Additionally, there would be no SALT limitation for pass-through entities.
  • Child Tax Credit: Increased and partially refundable, with further expansion in 2026.
  • Above-the-Line Deductions for Tips and Overtime: The tips deduction is limited to $25,000 per taxpayer and overtime deduction is limited to $15,000 per taxpayer. Both deductions are phased out for income over certain levels.
  • New Opportunity Zone (OZ) Rules: Expanded benefits for long-term rural and urban investments. The bill establishes a permanent OZ policy, creating a rolling 10-year OZ designation beginning in 2027. The bill also maintains the OZ designation process and strengthens eligibility requirements.
  • Moving deduction is permanently terminated (except for Armed Forces).
  • Pease limitation on itemized deductions which was suspended through 2025 is now permanently repealed. The bill replaces the Pease limitation with a simpler, uniform cap on deductions for higher income individuals.
  • Alternative Minimum Tax exemption and phaseout thresholds are made permanent effective Dec. 31, 2025. Reverts the exemption phaseout thresholds to 2018 levels of $500,000 ($1,000,000 in the case of a joint return), thereafter indexed for inflation. Adjusted phaseouts also reduce this exemption more quickly for high income taxpayers.
  • Enhanced Deduction for Seniors adds $6,000 bonus deduction for seniors (2025 thru 2028); phased out at higher incomes.
  • Limitations on Charitable Deductions for Individuals Who Itemize by providing a deduction only for charitable contributions to the extent that they exceed 0.5% of the taxpayer’s contribution base.
  • New “Trump Accounts”: Tax-advantaged savings accounts for children, including a $1,000 government-funded deposit for qualifying births (born after 2024 and before 2029).

 

Estate and Succession Planning Gets a Boost

  • Estate/Gift Tax Exemption Raised to $15 Million (per individual) and made permanent (indexed from 2026).

 

How Should You Approach the Impact of OBBBA?

The OBBBA includes both immediate and long-term provisions. For many business owners, it could reduce estimated taxes as early as the 3rd Quarter of 2025. We recommend maximizing the value by aligning your tax, business, and wealth strategies around these sweeping changes.

In the coming months we recommend connecting with your tax advisor to discuss how the bill impacts your overall planning approach. Integrating potential 2025 tax projections along with potentially updating your succession or estate plan may be important considerations.

 

Questions? We Are Here to Help.

Whether you’re navigating new compliance requirements or rethinking your business strategy, Newburg CPA is available to guide you through the opportunities and implications of OBBBA.

Contact your Newburg CPA resource at any point and visit us at www.newburg.com.