What the “One Big Beautiful Bill” Means for You and Your Business

Christopher T. Schmidt | 07.17.25

On July 4, 2025, President Trump signed into law P.L. 119 – 21, referred to as the One Big Beautiful Bill (“OBBB”). This legislation contains numerous tax code changes, including the permanent extension of portions of the 2017 Tax Cuts and Jobs Act (“TCJA”).

The following is an overview of some of the major changes under the OBBB. 

Permanent Changes

The legislation includes both temporary and permanent changes for individuals and businesses. The following is an overview of these permanent changes.

Impacts on Individuals

Income Tax Brackets

Individual income tax rate brackets from the TCJA have been extended permanently.

Increased Standard Deduction

The standard deduction increase under TCJA remains and will continue to be indexed for inflation.

Miscellaneous Itemized Deductions

TCJA’s suspension of miscellaneous deductions subject to the 2% floor is unchanged, with the exception of a deduction for educators to purchase equipment and supplementary class room materials.

529 Accounts

529 funds may now be used: 1) up to $20,000 per year for a more extensive list of education-related expenses of elementary and secondary students; and 2) to cover expenses incurred in obtaining certain professional credentials, licenses, or apprenticeships.

Tax Deferred Account for Children

A new tax-preferred account for minors, structured similarly to a traditional IRA. Contributions are limited to $5,000 annually and must end when the beneficiary turns 18. Withdrawals are only allowed beginning in the year the beneficiary turns 18. A $1,000 tax credit will be available for those opening a Trump account for a child born between 1/1/25 and 12/31/28.

Child Tax Credit

The expansion of the child tax credit (“CTC”) under the TJCA remains with an increase in the nonrefundable CTC amount to $2,200 per qualifying child and indexed for inflation for tax years after 2025.

Estate Tax Exemption

The increase in the federal estate tax exemption under the TCJA has been extended permanently and beginning with deaths occurring on or after January 1, 2026, the exemption will increase to $15 million per decedent.

End of Home Energy Credits

The OBBB ends the energy efficient home improvement property credit for any property placed in service after December 31, 2025 and ends the residential clean energy expenditures credit for any expenditures after December 31, 2025. 

Charitable Deduction for Non-Itemizers

Taxpayers who do not itemize deductions and elect the standard deduction may deduct up to $1,000 (single) or $2,000 (married filing jointly).

Qualified Opportunity Zones

Tax incentives for investing in Qualified Opportunity Zones (QOZs) are now a permanent feature of the tax code. 

Impacts on Business Owners 

QBI Deduction

The 20% deduction for Qualified Business Income (QBI) under Section 199A remains for eligible partnerships and S corporations.

Section 1202 Exclusion for QSBS

The gain exclusion for Qualified Small Business Stock (QSBS) is expanded to $15 million (up from $10 million) with taxpayers now able to access partial exclusions at 3- and 4‑year holding periods. 

100% Bonus Depreciation

Bonus depreciation for qualified property (new or used) acquired and placed in service after January 19, 2025, is extended permanently. 

Depreciation Benefits under Section 179

The Section 179 deduction limit increases to $2.5 million, with a phase-out beginning at $4 million (both indexed). 

Temporary Changes

The following is an overview of the OBBB’s temporary changes.

Tips and Overtime

Tip income is excluded from gross income up to $25,000 per year in 2025. The exclusion phases out beginning at $150,000 of income for individuals or $300,000 for joint filers. Overtime wages up to $12,500 for individuals or $25,000 for joint filers are exempt from federal income tax in 2025, subject to the same phase-out thresholds as the tip income exclusion. The exclusion for tips and overtime ends after December 31, 2028.

Auto Loan Interest Deductible

Taxpayers may deduct interest on auto loans up to $10,000 per year, provided the final assembly of the vehicle occurs in the U.S. and the vehicle is purchased between 2025 – 2028. The vehicle must be a car, minivan, van, SUV, pickup truck, or motorcycle.

Increased SALT Deduction Cap (effective through December 31, 2029)

The state and local tax (SALT) deduction cap is increased to $40,000 (up from $10,000) beginning in 2025. The cap will increase by 1% per year and then revert to $10,000 in 2030. The deduction phases out for taxpayers with income over $500,000 (indexed).

Additional $6,000 Exemption for Seniors

Taxpayers ages 65 or older are eligible for this additional exemption in 2025, which phases out starting at $75,000 of income for individuals or $150,000 for joint filers.

Conclusion

At over 800 pages, the OBBB contains many other tax provisions not mentioned above. In addition many of the changes highlighted above contain exceptions and nuances. If you have any questions regarding the OBBB and how it may impact you or your business, reach out to a member of our Tax Law Practice Group or Business Practice Group for further information.