President Trump officially signed the One, Big, Beautiful Bill Act (OBBBA) into law on July 4, 2025, extending several tax provisions in the Tax Cuts and Jobs Act (TCJA) and enacting new legislation as promised throughout his 2024 presidential campaign. While the OBBBA makes permanent numerous tax breaks, it also eliminates several others, including many clean energy-related tax breaks. 

Here’s a rundown of some of the key changes affecting individual and business taxpayers. Except where noted, these changes are effective for tax years beginning in 2025.

Key Business Tax Changes 

• Qualified Business Income (QBI) deduction. Makes permanent and expands the 20% QBI deduction for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships.
• Bonus depreciation. Makes permanent 100% bonus depreciation for the cost of qualified new and used assets, for property acquired after Jan. 19, 2025.
• New deduction for “qualified production property.” Creates a 100% deduction for the cost of “qualified production property” for qualified property placed into service after July 4, 2025, and before 2031.
• Section 179 expensing. Increases the Sec. 179 expensing limit to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with annual inflation adjustments going forward.
• Business interest deduction cap. Increases the cap on the business interest deduction by excluding depreciation, amortization and depletion from the calculation of “adjusted taxable income.”
• Domestic research and experimental expenditures. Permanently allows the immediate deduction of domestic research and experimentation expenses (retroactive to 2022 for eligible small businesses).
• Pass-through entity “excess” business losses. Makes permanent the excess business loss limit.
• Employee retention tax credit claims. Prohibits the IRS from issuing refunds for certain Employee Retention Tax Credit claims filed after Jan. 31, 2024.
• Clean energy tax incentives. Eliminates clean energy tax incentives, including the qualified commercial clean vehicle credit, the alternative fuel vehicle refueling property credit and the Sec. 179D deduction for energy-efficient commercial buildings
• Opportunity Zones. Permanently renews and enhances the Qualified Opportunity Zone program through 2033.
• New markets tax credit. Permanently extends this credit, which encourages private investments in low-income communities.
• Employer-provided child care credit. Permanently increases the maximum employer-provided child care credit to $500,000 ($600,000 for small businesses), with annual inflation adjustments.
• Employer credit for paid family and medical leave. Makes this credit permanent and modifies it several ways, including how it’s calculated and who is a “qualified employee.”
• Employer payments of student loans. Makes permanent the exclusion for employer payments of student loans, with annual inflation adjustments to the maximum exclusion beginning in 2027.
• Foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) deductions. Makes permanent the FDII and GILTI deductions and the minimum base erosion and anti-abuse tax (BEAT).
• Qualified small business stock (QSBS) gain exclusion. Expands the QSBS exclusion for stock issued after the date of enactment. 

Key Individual Tax Changes 

• Individual tax rates. Makes permanent the TCJA’s individual tax rates:
  • 10% - for incomes up to $11,600
  • 12% - for incomes between $11,601 - $47,150
  • 22% - for incomes between $47,151 - $100,525
  • 24% - for incomes between $100,526 - $191,950
  • 32% - for incomes between $191,951 - $243,725
  • 35% - for incomes between $243,726 - $609,350
  • 37% - for incomes above $609,350
• Standard deduction. Makes permanent the near doubling of the standard deduction. For 2025, the standard deduction increases to $15,750 for single filers, $23,625 for heads of households and $31,500 for joint filers, with annual inflation adjustments going forward.
• Personal exemptions. Makes permanent the elimination of personal exemptions.
• Child Tax Credit (CTC). Permanently increases the CTC to $2,200, with annual inflation adjustments going forward.
• State and local tax (SALT) deduction. Temporarily increases the limit on the deduction for the SALT cap to $40,000, with a 1% increase each year through 2029, after which the $10,000 limit will return.
• Home mortgage interest deduction. Permanently reduces the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers) but includes mortgage insurance premiums as deductible interest.
• Home equity debt deduction. Permanently eliminates the deduction for interest on home equity debt.
• Casualty loss deduction. Permanently limits the personal casualty deduction for losses resulting from federally declared disasters and certain state declared disasters.
• Miscellaneous itemized deductions. Permanently eliminates miscellaneous itemized deductions except for unreimbursed educator expenses.
• Moving expense deduction. Permanently eliminates the moving expense deduction (with an exception for members of the military and their families in certain circumstances).
• Section 529 expenses. Expands the allowable expenses that can be paid with tax-free Section 529 plan distributions.
• Alternative Minimum Tax (AMT). Makes permanent the TCJA’s increased individual AMT exemption amounts.
• Gift and estate tax exemption. Permanently increases the federal gift and estate tax exemption amount to $15 million for individuals and $30 million for married couples beginning in 2026, with annual inflation adjustments going forward.
• Tip income deduction. For 2025–2028, creates an above-the-line deduction (meaning it’s available regardless of whether a taxpayer itemizes deductions) of up to $25,000 for tip income in certain industries, with income-based phaseouts (payroll taxes still apply).
• Qualified overtime pay deduction. For 2025–2028, creates an above-the-line deduction of up to $12,500 for single filers or $25,000 for joint filers for qualified overtime pay, with income-based phaseouts (payroll taxes still apply).
• Qualified passenger vehicle loan interest deduction. For 2025–2028, creates an above-the-line deduction of up to $10,000 for qualified passenger vehicle loan interest on the purchase of certain American-made vehicles, with income-based phaseouts.
• Bonus deduction for senior taxpayers. For 2025–2028, creates a bonus deduction of up to $6,000 for taxpayers age 65 or older, with income-based phaseouts.
• Itemized deductions. Limits itemized deductions for taxpayers in the top 37% income bracket, beginning in 2026.
• Trump accounts. Establishes tax-favored “Trump Accounts,” which will provide eligible newborns with $1,000 in seed money, beginning in 2026.
• Adoption tax credit. Makes the adoption tax credit partially refundable up to $5,000, with annual inflation adjustments (no carryforwards allowed).
• Clean energy tax credits. Eliminates several clean energy tax credits, generally after 2025, including the clean vehicle, energy-efficient home improvement and residential clean energy credits.
• Affordable Care Act tax credits. Restricts eligibility for the Affordable Care Act’s premium tax credits.
• Charitable contributions. Creates a permanent charitable contribution deduction for non-itemizers of up to $1,000 for single filers and $2,000 for joint filers, beginning in 2026. Additionally, the OBBBA imposes a 0.5% floor on charitable contributions for itemizers, beginning in 2026.

Stayed Tuned

Our tax pros are hard at work breaking down the OBBBA and how U.S. taxpayers should plan accordingly. Be sure to subscribe to our newsletter to stay up to date on the latest tax news as we break this down further. You may also contact us to learn more about how this may impact you and your business.