Trump Signs “One Big Beautiful Bill Act”: What It Means for Your Taxes

July 08, 2025 Slattery & Holman, P.C.

On July 4, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law — an 870-page piece of legislation with major implications for individuals and businesses alike. This landmark bill builds on the 2017 Tax Cuts and Jobs Act (TCJA), making many of its provisions permanent, while introducing a wave of new deductions and adjustments — some temporary, others long-term.

Below is a summary of the most impactful provisions, effective for tax years beginning in 2025, unless otherwise noted.

Key Tax Changes for Individuals

Income Tax & Standard Deduction

  • Permanently retains TCJA tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37%
  • Permanently increases the standard deduction, with annual inflation adjustments:
    • $15,750 for single filers
    • $23,625 for heads of households
    • $31,500 for joint filers
  • Personal exemptions permanently eliminated

Family & Child Benefits

  • Child Tax Credit increased to $2,200, with inflation indexing
  • Adoption Tax Credit becomes partially refundable up to $5,000 (no carryforwards)
  • “Trump Accounts”: Eligible newborns receive $1,000 seed funding (beginning in 2026)

Temporary Deductions (2025–2028)

  • Tip income deduction: Above-the-line deduction up to $25,000 for qualifying industries (with income-based phaseouts)
  • Overtime pay deduction: Up to $12,500 (single) or $25,000 (joint)
  • American-made vehicle loan interest: Up to $10,000 deductible
  • Senior bonus deduction: Up to $6,000 for taxpayers age 65+, with phaseouts

Housing & Mortgage

  • Mortgage interest deduction capped at $750,000 of debt (includes mortgage insurance premiums)
  • Home equity loan interest deduction eliminated
  • Personal casualty loss deduction limited to federally or certain state-declared disasters

Other Itemized & Above-the-Line Changes

  • SALT cap raised: Temporarily increases to $40,000 in 2025, growing 1% per year through 2029, then returns to $10,000
  • Miscellaneous itemized deductions eliminated, except for unreimbursed educator expenses
  • Moving expense deduction eliminated, except for active-duty military
  • Clean energy tax incentives eliminated, including:
    • Clean vehicle credits
    • Residential clean energy and energy efficiency credits
  • Charitable contributions:
    • Above-the-line deduction for non-itemizers: $1,000 (single) / $2,000 (joint)
    • New 0.5% floor on itemized charitable deductions (starting in 2026)

Education & Estate Planning

  • Section 529 plans expanded to cover additional qualified expenses
  • Federal gift and estate tax exemption increased to $15M (individual) / $30M (joint) beginning in 2026, with annual inflation adjustments
  • Alternative Minimum Tax (AMT) exemption levels permanently increased

Key Tax Changes for Businesses

Deductions & Depreciation

  • Qualified Business Income (QBI) deduction for pass-through entities (20%) made permanent and expanded
  • 100% bonus depreciation made permanent for new and used assets acquired after Jan. 19, 2025
  • Sec. 179 expensing limit raised to $2.5M, with $4M phaseout
  • New deduction for “qualified production property” (100%) for property placed in service after July 4, 2025, and before 2031
  • Cap on interest deductions eased by excluding depreciation, amortization, and depletion from “adjusted taxable income” (ATI) calculation
  • Domestic R&D expenses permanently deductible for eligible small businesses (retroactive to 2022)
  • Excess business loss limitation made permanent

Eliminations & Phaseouts

  • Employee Retention Credit (ERC) refunds denied for claims filed after Jan. 31, 2024
  • Clean energy tax incentives eliminated, including:
    • Commercial clean vehicle credit
    • Alternative fuel refueling property credit
    • Sec. 179D energy-efficient building deduction

Incentives & Credits

  • Qualified Opportunity Zone program made permanent
  • New Markets Tax Credit permanently extended
  • Employer-provided child care credit permanently increased to $500,000 ($600,000 for small businesses), with annual inflation adjustments
  • Paid family & medical leave credit made permanent and modified
  • Employer student loan payment exclusion made permanent, with inflation adjustments beginning in 2027

International & Investment Incentives

  • Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI) deductions made permanent
  • Base Erosion and Anti-Abuse Tax (BEAT) made permanent
  • Qualified small business stock exclusion expanded for new stock issuances

What’s Next?

This summary highlights some of the major changes — but there are dozens of additional provisions, caveats, and phaseouts that could impact your 2025 tax strategy. Many of these changes will require new regulations and IRS guidance, and some may be subject to legal or political challenges.

Our team is closely monitoring developments and will help you navigate the new tax landscape.

Need help planning ahead? Contact us today to schedule a personalized tax strategy session.

 

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