On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), marking the most significant update to federal tax law since the Tax Cuts and Jobs Act of 2017. This new law contains major tax provisions that impact individuals, families, and businesses across the country.
Below is a summary of the most relevant highlights based on provisions that we believe will matter most:
Key Individual Provision
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Tax rates: Makes permanent the 2017 TCJA tax brackets and provides one additional year of inflation indexing.
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SALT cap adjustments: Temporarily increases the federal deduction for state and local taxes to $40,000 beginning in 2026, indexed through 2029. Reverts to $10,000 in 2030.
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Standard deduction: Makes permanent the TCJA deduction levels and increases them (beginning after Dec. 31, 2025) to:
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$15,750 for single filers
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$23,625 for heads of household
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$31,500 for married filing jointly
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Enhanced deduction for seniors: Creates a $6,000 deduction for individuals 65+. Phases out above $150,000 (married) or $75,000 (individual). Expires in 2028.
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Itemized deductions: Permanently suspends miscellaneous itemized deductions and introduces a cap on deductions for higher-income taxpayers.
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Child tax credit: Makes permanent the TCJA increased child tax credit and the additional credit (increased to $1,700 in 2025), with adjustments for inflation. The nonrefundable credit rises to $2,200 in 2026.
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Charitable deductions: Starting in 2026, non-itemizers can claim a deduction of up to $1,000 ($2,000 for joint filers). Itemizers may deduct contributions above 0.5% of AGI.
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No tax on tips: Temporary deduction (2025–2028) of up to $25,000 for qualified tips received in customary tip-based occupations.
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No tax on overtime: Temporary deduction (2025–2028) of up to $12,500 ($25,000 for joint filers) for qualified overtime pay. Phases out above $150,000 ($300,000 for joint filers).
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Car loan interest: Creates a deduction of up to $10,000/year for interest paid on qualified personal-use car loans for vehicles assembled in the U.S. Phases out for incomes above $200,000 (married) or $100,000 (single). Expires at the end of 2028.
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Individual trust accounts (“Trump accounts”): Introduces tax-favored accounts for minors to support education, small business investment, or first-time home purchases. Annual limit: $5,000. One-time $1,000 government deposit for eligible children born between Dec. 31, 2024, and Jan. 1, 2029.
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Clean energy incentives: Terminates many individual clean energy credits, including electric vehicle purchases after Sept. 30, 2025, and residential clean energy improvements placed in service after Dec. 31, 2025.
Estate Tax Provisions
- Estate & gift tax: Permanently increases the estate tax exemption and lifetime gift tax exemption to $15 million for single filers ($30 million for married couples) beginning in 2026, indexed annually for inflation.
Key Small Business Provisions
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Bonus depreciation: Permanently allows for 100% bonus depreciation for property acquired and placed in service on or after Jan. 19, 2025.
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Research and Development (R&D): Allows for immediate expensing of domestic research costs, while providing an ability to accelerate the remaining unamortized amounts of previously capitalized research costs incurred in 2022 through 2024.
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Pass-through business deduction: Makes permanent the Section 199A qualified business income deduction, with no change to the current 20% deduction percentage.
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Pass-Through Entity Tax (PTET) elections: Maintains the status quo regarding PTET deductions, but the provision is made permanent.
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Form 1099 reporting: Beginning in 2026, reporting thresholds for Forms 1099-NEC and 1099-MISC are increased from $600 to $2,000, indexed for inflation.
If you’re wondering how the OBBBA may affect your business or personal tax situation, Ulshoeffer CPAs, PLLC is here to help. We specialize in fractional CFO services and proactive tax planning solutions for small businesses. Reach out to our team. We’ll help you make sense of the numbers so you can make data driven decisions and tax savings moves with confidence.