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Accounting & Tax

Key Tax Provisions in the House’s One Big Beautiful Bill Act

by K+P Team
4 min read
Jul 11, 2025 2:17:06 PM

Take outs:

  • On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA)

  • Lower tax rates and higher standard deduction are made permanent, locking in the 2017 tax cuts.

  • Child tax credit increases to $2,200, new deductions are created for seniors, tips, and overtime, and the SALT deduction cap rises to $40,000 before reverting later.

  • Businesses get 100% bonus depreciation back, higher Section 179 expensing limits, and immediate expensing for domestic R&D.

  • FDII and GILTI deductions are reduced, Form 1099 thresholds increase, and several clean energy tax credits are eliminated.

Key Tax Provisions in the House’s One Big Beautiful Bill Act

 

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), a reconciliation package that includes a broad array of tax provisions affecting individuals, businesses and international taxpayers.

We've highlighted the key provisions and offer preliminary insights into how they may affect your tax planning. 

OBBBA_3x2_V2

 

 

Individual Income Tax Protection

Permanent extension of lower tax rates and brackets

The OBBBA generally makes the tax rates enacted in 2017 in the Tax Cuts and Jobs Act (TCJA) permanent. An additional year of inflation adjustment is added for determining the dollar amounts at which the 12% rate bracket ends and the 22% rate bracket begins.
Permanent extension of lower tax rates and brackets

Standard deduction

The nearly doubled standard deduction would be made permanent. Effective for 2025, the amounts are as follows: - Single & Married Filing Separately (MFS): $15,750 (indexed) - Head of Household (HoH): $23,625 (indexed) - Married Filing Jointly (MFJ): $31,500 (indexed)
Standard deduction

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.
Child Tax Credit

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. 
Estate and gift tax exemption

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. 
SALT deduction cap

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). 
Charitable deduction for non-itemizers

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. 
No tax on tips and overtime

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). 
Enhanced deduction for seniors

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. 
Car loan interest deduction

Moving expense deduction

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

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. 
Home mortgage interest and insurance premiums

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. 
Casualty loss deduction for personal casualties

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. 
Other deductions and credits

 

 

Business Tax Provisions

 

QBI deduction

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

Bonus depreciation

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

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. 
Sec. 179 expensing

R&D 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. 
R&D expenditures

Excess business loss permanency

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

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).
Business interest deduction

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). 
FDII and GILTI

BEAT

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

Third-party network transaction reporting threshold

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

Form 1099 reporting threshold

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

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.
Renewed Opportunity Zones

Clean energy and IRS credits

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

 

How can you prepare?

A phased approach to planning will align with the timing and impact of this legislative development. This approach allows us to support you with timely strategies tailored to each stage of implementation:

  • Short-term planning will focus on immediate actions and compliance considerations for tax provisions already in effect or taking effect soon.

  • Mid-term planning will address transitional provisions and opportunities that emerge over the next 12–18 months.

  • Long-term planning will help position you for sustained success by anticipating future changes and aligning your financial goals with the broader tax policy environment.

Kelly+Partners continue to monitor developments closely and provide updates and guidance as new details become available.

We’re here to help

Our team is available to discuss how these provisions may impact your personal or business tax situation and to help you plan accordingly.

 

 

 

 

 

 

 

 
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