The One Big Beautiful Bill Act (OBBBA): Key Tax Reforms & What They Mean for You

On July 4, 2025, a major shift in U.S. tax law was signed into effect: the One Big Beautiful Bill Act (OBBBA), a reconciliation package that includes a broad array of tax provisions affecting individuals, businesses and international taxpayers.

For CPAs, business owners, and financial professionals alike, the OBBBA introduces both challenges and opportunities that require proactive, strategic planning.

In this blog, we unpack the core elements of the bill and how they could impact your tax strategy in the coming months and years.

What is the OBBB Act?

Dubbed the “One Big Beautiful Bill” (OBBB), this new law builds on the 2017 Tax Cuts and Jobs Act (TCJA) by making many of its tax cuts permanent, while also adding new deductions, income limits, and compliance requirements.

Permanent extension of several individual and business tax cuts

Expanded IRS enforcement and audit authority

New technology-driven compliance systems

Increased transparency for ownership and compensation

Revised thresholds for common tax filings

Key Provisions for Individuals

Income Tax Rates & Standard Deduction

The lower income tax brackets from TCJA are made permanent.

Additional inflation adjustment applies for the 12% and 22% rate brackets.

Standard Deduction (2025):

Single/MFS: $15,750

Head of Household: $23,625

MFJ: $31,500

Credits, Deductions & Adjustments

Child Tax Credit: The nonrefundable child tax credit increases to $2,200 per child beginning in 2025 and the credit amount is indexed for inflation.

Estate and gift tax exemption: The increased exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation.

SALT deduction cap: The state and local tax (SALT) deduction cap is increased to $40,000 per household and would be phased out for taxpayers with modified adjusted gross income (MAGI) over $500,000. In 2030, the deduction will revert to $10,000.

Charitable deduction for non-itemizers: An above-the-line deduction is added for charitable contributions that starts in 2026 ($1,000 for single filers, $2,000 for joint filers).

No tax on tips and overtime: For 2025–2028, above-the-line deductions are created for qualified tips (in certain occupations) and for overtime premium pay, subject to income and occupation limitations.

Enhanced deduction for seniors: For 2025–2028, a $6,000 deduction is available for seniors (age 65+) with income below $75,000 ($150,000 for joint filers).

Car loan interest deduction: For 2025–2028, up to $10,000 of interest on loans for U.S.-assembled passenger vehicles may be deducted, subject to income phaseouts

Repealed or Limited

Moving expense deduction: The deduction is permanently terminated except for those in the Armed Forces.

Home mortgage interest and insurance premiums: The $750,000 limit on the treatment of mortgage insurance premiums as qualified residence interest is made permanent. The exclusion of home-equity indebtedness from the definition of qualified residence interest is also now permanent.

Casualty loss deduction for personal casualties: The limitation on personal casualty loss deductions is made permanent. However, a provision is added to include state-declared disasters.

Other deductions and credits: Several other deductions and credits, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits are made permanent.

Key Provisions for Businesses

Deductions & Incentives

QBI deduction: The qualified business income (QBI) deduction is made permanent and the deductible amount for each qualified business would remain at 20%.

Bonus depreciation: 100% expense (bonus depreciation) for qualified property is restored for property placed in service after Jan. 19, 2025.

Sec. 179 expensing: The maximum amount a business may expense for qualifying expenses is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.

R&E expenditures: Immediate deduction of domestic research or experimental expenses paid or incurred in 2025 is allowed. However, research or experimental expenses attributable to research that is conducted outside the United States will continue to be capitalized and amortized over 15 years.

Business Losses, Interest & Compliance

Excess business loss permanency: The excess business loss limitation is made permanent, and the existing treatment of loss carryforwards is maintained.

Business interest deduction: The interest expense limitation is calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), rather than earnings before interest and taxes (EBIT).

International Tax

FDII and GILTI: Beginning in 2026, the deduction percentage is reduced to 33.34% for foreign-derived intangible income (FDII) and 40% for global intangible low-taxed income (GILTI).

BEAT: The base-erosion and anti-abuse tax (BEAT) rate has increased from 10% to 10.5%.

Reporting & Filing

Third-party network transaction reporting threshold: Form 1099-K, Payment Card and Third-Party Network Transactions, reporting reverts to previous rules where reporting is required if transactions exceed $20,000 and the aggregate number of transactions exceeds 200.

Form 1099 reporting threshold: The information reporting threshold for payments for services increases to $2,000 in a calendar year (from $600) in 2026, and the threshold amount will be indexed annually for inflation starting in 2027.

Renewed Opportunity Zones: Opportunity zones provisions are made permanent, but with several changes, including narrowing the definition of “low-income community.” The changes will generally take effect in 2027.

Clean energy and IRS credits: Several clean energy credits from the Inflation Reduction Act (IRA) are terminated.

IRS Oversight & AI-Driven Audits

Beyond rate and deduction changes, the OBBBA equips the IRS with new enforcement tools, including AI-driven audit selection and expanded access to ownership disclosures. Expect increased visibility into:

Beneficial ownership

Officer compensation

Cross-border structures

S-corp and partnership income

How to Prepare: A Phased Approach

Tax planning under OBBBA isn’t a one-time review—it’s a multi-phase strategy designed to evolve with the law.

Short-Term Planning

Focus on deductions and credits effective in 2025–2026. Adjust filing practices and benefit from the restored bonus depreciation, revised thresholds, and new personal deductions.

Mid-Term Planning

Evaluate transitional opportunities such as Opportunity Zone adjustments and SALT cap strategies. Monitor emerging IRS guidance and ensure compliance alignment.

Long-Term Planning

Revisit business entity structure, succession, estate plans, and international holdings in light of permanent rule changes and heightened IRS scrutiny.

Conclusion

The One Big Beautiful Bill Act represents the most significant tax reform since the TCJA. With permanent extensions, phased implementations, and tech-enabled enforcement, it’s critical to partner with professionals who can translate complexity into actionable strategy.

We’re here to help. Whether you’re an individual taxpayer, business owner, or multinational operator, our team can guide you through the changes and optimize your position.

Let’s plan forward together. Contact us today.

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