On July 4, 2025, President Donald Trump signed into law the “One Big Beautiful Bill Act” (H.R. 1)—a sweeping $3.8 trillion reconciliation package that enacts permanent and temporary changes to individual, business, and international tax provisions. Now that the bill has passed both chambers and been signed into law, we want to highlight key provisions that may affect you starting in the 2025 tax year.

🔹 Individual Tax Highlights:

• Permanent Tax Rates & Standard Deduction: The individual tax brackets from the 2017 Tax Cuts and Jobs Act (TCJA) are now permanent, along with the enhanced standard deduction. Additional temporary increases apply from 2025–2028.
• Child Tax Credit: The credit is increased to $2,200 per qualifying child starting in 2025, with future inflation indexing. The refundable portion remains limited.
• Estate & Gift Tax: Exemption raised to $15 million per individual ($30 million per couple) in 2026, indexed for inflation.
• SALT Deduction Cap: Increased to $40,000 per household, with phaseouts for MAGI over $500,000.
• New Deductions:
  • Tips and Overtime Pay: Above-the-line deductions allowed (subject to income and occupational limits) from 2025–2028.
  • Car Loan Interest: Deduction allowed for up to $10,000 in interest on U.S.-assembled vehicles (2025–2028).
• Seniors’ Bonus Deduction: Taxpayers aged 65 or older may now claim an above-the-line deduction of $6,000 (or $12,000 if both spouses are age 65+ and filing jointly) for the 2025 through 2028 tax years. The deduction phases out between $75,000–$175,000 MAGI (single) and $150,000–$250,000 (joint). This does not directly change the taxation of Social Security benefits, but may reduce or eliminate the tax due on them by lowering taxable income.
• Charitable Contributions: Above-the-line deduction reinstated for non-itemizers through 2028.  $1,000 for Single filers and $2,000 for married filing jointly.
• Pease Limitation Repeal: The Sec. 68 itemized deduction limitation is permanently repealed. This means that itemized deductions are no longer subject to the phaseout for high-income taxpayers.
• Mortgage Interest & Insurance: $750,000 mortgage debt cap and deduction for mortgage insurance premiums made permanent.
• Personal Casualty Losses: Limitation to federally declared disasters is now permanent.
• Other Credits Extended or Enhanced: Includes the adoption credit, education tax benefits, and employer-provided child care and leave credits.

🔹 Business Tax Highlights:

• QBI Deduction (Sec. 199A): The 20% qualified business income deduction is made permanent, with no increase to 23% as previously proposed.
• Bonus Depreciation: 100% expensing is restored for qualifying property placed in service from Jan. 19, 2025 through Dec. 31, 2029.
• Section 179 Expensing: Limit increased to $2.5 million, with a $4 million phaseout threshold (indexed after 2025).
• Manufacturing Expensing: New full expensing option for certain production property placed in service through 2032.
• R&D Costs: The requirement to amortize domestic R&D expenditures is suspended through 2029; foreign R&D amortization remains in place.
• Excess Business Loss Limitation: Made permanent, with retesting rules for disallowed losses in subsequent years.
• Interest Deduction Limitation: EBITDA-based calculation restored for 2025–2029.
• International Revisions: Modest reductions in GILTI and FDII deduction cuts; BEAT rate set to increase slightly to 10.1% instead of 12.5%.
• Third-Party Network Reporting (Form 1099-K): Threshold reinstated to $20,000 and 200 transactions.
• Form 1099 Reporting (NEC/MISC): Threshold raised to $2,000, indexed for inflation.
• Fringe Benefits (UBTI): Certain transportation expenses by exempt orgs now treated as UBTI, with a church exception.
• New Opportunity Zones: Created for 2027–2033 with rural-focused incentives.
• Clean Energy Credits: Several IRA-era energy credits are repealed or phased out.

🔹 What Should You Do Now?

Many provisions take effect for tax year 2025, while others are phased in or temporary. We strongly recommend reviewing your current tax planning strategies with us to take advantage of the new rules—and prepare for those expiring after 2028.