Overview of the New Tax Law

On July 4, 2025 President Trump signed into law the 800-page “One Big Beautiful Bill Act (OBBBA)”. It makes permanent certain expiring provisions of prior tax law, eliminates certain existing tax breaks and creates new ones.  

Following is a list of a few of the changes. As my mother used to say, “The devil is in the details!”  

INDIVIDUALS 

• Makes permanent the TCJA’s individual tax rates of 10%, 12%, 22%, 24%, 32%, 35% and  37% 
• Nearly doubles the standard deduction 
• For 2025–2028, creates an additional deduction of up to $6,000 for taxpayers age 65 or  older, with income-based phaseouts 
• For 2025–2028, creates a new deduction of up to $25,000 for tip income in certain  industries, with income-based phaseouts 
• For 2025–2028, creates a new deduction of up to $12,500 for single filers or $25,000 for joint  filers for qualified overtime pay, with income-based phaseouts 
• For 2025–2028, creates a new deduction of up to $10,000 for qualified passenger vehicle  loan interest on the purchase of certain American-made vehicles, with income-based  phaseouts 
• Increases the limit on the deduction for state and local taxes (the SALT cap) to $40,000  beginning in 2025, with an income-based reduction and a 1% increase each year through  2029, after which the $10,000 limit will return 
• Creates a permanent charitable contribution deduction for nonitemizers of up to $1,000 for  single filers and $2,000 for joint filers, beginning in 2026 
• Permanently increases the child tax credit to $2,200, beginning in 2025, with annual  inflation adjustments going forward 
• Expands the allowable expenses that can be paid with tax-free Section 529 plan  distributions, beginning with distributions made after July 4, 2025 
• Expands the qualified small business stock gain exclusion for stock acquired after July 4,  2025 
• Permanently increases the federal gift and estate tax exemption amount to $15 million for individuals and $30 million for married couples beginning in 2026, plus an annual adjustment for inflation for married couples, starting in 2026, with annual inflation adjustments going forward 
• Eliminates several clean energy tax credits, generally after 2025, including the energy-efficient home improvement and residential clean energy credits — but the clean vehicle  credit ends Sept. 30, 2025 

BUSINESSES 

• Makes permanent and expands the 20% Sec. 199A qualified business income (QBI)  deduction for owners of pass-through entities and sole proprietorships
• Makes permanent 100% bonus depreciation for the cost of qualified assets, for property  acquired after January 19, 2025 
• Creates a 100% deduction for the cost of “qualified production property” for qualified  property placed in service after July 4, 2025, and before 2031 
• Increases the Sec. 179 expensing limit to $2.5 million and the expensing phaseout  threshold to $4 million for 2025, with annual inflation adjustments going forward • Increases the cap on the business interest deduction beginning in 2025 by excluding  depreciation, amortization and depletion from the calculation of adjusted taxable income • Makes permanent the excess business loss limit 
• Permanently allows the immediate deduction of domestic research and experimentation  expenses (retroactive to 2022 for eligible small businesses) not used to claim the research  credit 
•  Eliminates clean energy tax incentives, generally after 2025, including the alternative fuel vehicle refueling property credit and the Sec. 179D deduction for energy-efficient  commercial buildings (both after June 30, 2026) — but the qualified commercial clean  vehicle credit ends Sept. 30, 2025