President Trump Signs the One, Big, Beautiful Bill Act into Law: What It Means for You

On July 4, 2025, President Trump signed into law the One, Big, Beautiful Bill Act (OBBBA), a sweeping 870-page tax and economic package. The legislation makes permanent many provisions from the Tax Cuts and Jobs Act (TCJA), while introducing new deductions, credits, and limits for both individuals and businesses.

Some provisions are permanent; others are temporary or come with phaseouts, eligibility rules, and sunset dates. Below is a high-level summary of the most impactful tax changes, effective beginning in 2025, unless otherwise noted.

Key Tax Changes for Individuals:

·    Tax Rates & Deductions: Makes the TCJA’s lower individual tax rates and increased standard deduction permanent, with ongoing inflation adjustments.

·    Mortgage & Property: Maintains the mortgage interest deduction cap at $750,000 loan amount; home equity interest is no longer deductible.

·    SALT Deduction

·    Temporarily increases the state and local tax cap to $40,000 through 2029, indexed for inflation.

·    Phaseouts apply at higher income levels.

·    Charitable Giving:

·    Introduces a new non-itemized deduction up to $2,000.

·    Allows cash contributions to be deducted once they exceed 0.5% of AGI, beginning in 2026.

·    Establishes a new tax credit for contributions made to scholarship-granting organizations beginning in 2027.

·    New Above-the-Line Deductions (2025–2028), subject to income phaseouts:

·    Up to $25,000 for tip income in qualifying service industries.

·    Up to $25,000 for qualified overtime pay.

·    Up to $10,000 for interest on loans for eligible American-made vehicles.

·    A $6,000 bonus deduction for taxpayers 65 and older.

·    Family & Children:

·    Raises the Child Tax Credit to $2,200 per qualifying child, with annual inflation indexing.

·    Introduces “Trump Account,” tax-advantaged savings for newborns born beginning in 2025, launching in 2026.

·    Permanently increases the amount of the child and dependent care tax credit to 50% for qualifying expenses beginning 2026, subject to credit rate income phaseouts.

·    Enhances the Adoption Tax Credit to be partially refundable up to $5,000, with indexing for inflation.

·    Gambling Losses: Limits the deductibility of gambling losses to 90% of winnings, beginning in 2026.

·    Estate & Gift Tax: Increases the exemption to $15 million per individual and $30 million per couple, starting in 2026.

·    Energy Tax Breaks: Begins a phaseout of clean energy credits, including those for electric vehicles and home improvements.

Key Tax Changes for Businesses:

·    QBI Deduction: Makes permanent the 20% deduction for owners of pass-through entities and sole proprietors.

·    Bonus Depreciation: Allows a 100% deduction for new/used qualified assets acquired after January 19, 2025.

·    Qualified Production Property: Introduces a new 100% deduction for qualified domestic production expenses, available from July 4, 2025, through 2031.

·    Sec. 179 Expensing: Increases the limit to $2.5 million, with the phaseout threshold beginning at $4 million.

·    Business Interest Deduction: Expands deductibility by excluding depreciation and amortization from adjusted income.

·    R&D Costs: Allows immediate deduction of expenses, retroactive to 2022 for small businesses.

·    ERC Claims: Denies refunds for claims filed after January 31, 2024.

·    Opportunity Zones & New Markets Credit: Permanently extends both programs. New gain deferral rules and a recurring process of zone designation will apply.

·    Employer Incentives: Enhances credits for employer-provided childcare, paid leave, and student loan payment assistance.

·    FDII, GILTI & BEAT: Makes international tax rules permanent, including provisions that affect U.S.-based multinationals.

·    Clean Energy Credits: Eliminates credits for commercial property and vehicles. Projects may remain eligible before June 30, 2026.

Next Steps

The OBBBA will require new guidance and implementation by the IRS, and its complexity will create new planning opportunities and challenges. Hoberman & Lesser is actively analyzing the legislation and will continue advising clients as further developments unfold.

Questions? Contact Hoberman & Lesser to discuss how the OBBBA and these changes may affect your personal or business tax strategy.