One Big Beautiful Bill Act
What the New U.S. Tax Law Means for You and Your Business
The recently passed One Big Beautiful Bill Act (OBBBA) brings the most sweeping tax changes since 2017, delivering permanent tax cuts, targeted deductions, and significant new incentives for both individuals and business owners. Whether you're an employee, a retiree, or a business owner, this legislation has something that could impact your 2025 and beyond.
Here’s what you need to know.
INDIVIDUAL TAX CHANGES
1. Permanent Lower Tax Rates
The tax cuts from 2017 were set to expire in 2025. The new bill locks in those lower rates permanently, including:
37% top bracket (down from 39.6%)
22% middle bracket (down from 25%)
12% lower bracket (down from 15%)
Source: Investopedia
2. Standard Deduction Doubled—And Now Permanent
The standard deduction was nearly doubled in 2017. This bill makes that increase permanent, saving taxpayers over $1 trillion in the next decade.
Source: PKF O'Connor Davies
3. Expanded SALT Deduction Cap (Temporarily)
State and Local Tax (SALT) deductions were capped at $10,000, hurting taxpayers in high-tax states. The new bill raises the cap to $40,000 through 2029, indexed for inflation.
Source: WSJ
4. New Car Loan Interest Deduction
Buy an American-assembled vehicle between 2025 and 2028, and you may deduct up to $10,000 in loan interest. This deduction is subject to income thresholds.
Source: Kiplinger
5. Overtime and Tip Income Deduction
The bill creates a deduction for overtime wages (up to $12,500 single / $25,000 married) and tip income (up to $25,000) for qualifying workers in service industries. Income limits apply.
Source: MarketWatch
6. Child Tax Credit Increased
The child tax credit increases from $2,000 to $2,200 per child and is made permanent, with income phaseouts starting at $200,000 (single) and $400,000 (married).
Source: Investopedia
7. Bigger Tax Breaks for Seniors
Seniors age 65 and older can now claim an additional $6,000 deduction, up from the current $2,000–$3,200. Phase-outs begin around $75,000 (single) or $150,000 (joint).
Source: WSJ
BUSINESS TAX CHANGES
1. QBI Deduction Made Permanent
The 20% Qualified Business Income deduction for pass-through entities (LLCs, S Corps, partnerships) is now permanent. Income thresholds are expanded to allow more high-income earners to qualify.
Source: Grant Thornton
2. Bonus Depreciation Restored to 100%
Originally scheduled to drop to 40% in 2025, bonus depreciation is now restored to 100% for qualifying assets purchased after January 19, 2025. This allows full expensing of items such as:
Equipment
Vehicles
Furniture
Aircraft and more
Source: Brady Ware
3. Full R&D Expensing
All qualifying research and development costs can now be fully expensed immediately, rather than amortized over several years.
Source: KBKG
4. Opportunity Zone Incentives Renewed
Investors can continue deferring and avoiding capital gains taxes when investing in qualified Opportunity Zone funds, encouraging reinvestment into low-income communities.
Source: Journal of Accountancy
What You Should Do Now
This bill provides powerful planning opportunities, but many benefits phase out at higher incomes or are time-limited. If you're unsure how these changes affect your 2025 strategy, consider:
Reviewing your tax withholding and estimated payments
Evaluating your business purchases before January 2025
Exploring eligibility for the QBI and R&D deductions
Coordinating with a tax strategist early
Need Help?
If your current CPA isn’t proactively helping you plan around these changes, please click here to contact us immediately.
