One Big Beautiful Bill Act resource center

Introduction to OBBBA

by Mark Friedlich, ESQ, CPA

On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (OBBBA), formally titled, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14.” (the "Act"). The broad legislation extended key expiring provisions of the Tax Cuts and Jobs Act (TCJA, P.L. 115-97) and included additional tax relief for individuals and businesses. 

Expanding on the TCJA's framework, the Act also supports domestic energy production as part of the administration’s broader agenda focused on economic growth, national and border security, and strategic resource independence. It also includes several revenue offsets to reduce some of the Act’s costs. The offsets include significant changes to Medicaid and the Supplemental Nutrition Assistance Program (SNAP). 

Fortunately, comprehensive guidance and expert support are available to assist business owners, legal practitioners, and financial professionals in interpreting the Act and determining appropriate next steps. 

The OBBBA has landed: A practitioner's field guide for 2025–2029 

The One Big Beautiful Bill Act (OBBBA) rewires individual and business taxation. The headline changes are not cosmetic; rate permanence, revived 100% bonus, a reshaped pass-through deduction, tighter reporting, and a wholesale rethink of several energy credits. 

If you serve individuals, pass-throughs, or closely held C-corporations, you'll want to rework engagement letters, planning calendars, and client education now so you're not cleaning up after filing season. 

Individuals: Rates, brackets, and deductions that force new playbooks 

• Rates and brackets are now permanently set to 10% - 37% for individuals; 10% - 37% for trusts and estates.
• Filing thresholds also shift because the personal/dependency exemptions remain repealed while the standard deduction is boosted.  
• Senior deduction: get a temporary $6,000 extra deduction for 2025–2028 
• AMT exemptions are made permanent; the joint filer AMT phase-out threshold reverts to $1,000,000 (indexed) starting in 2026. 
• Standard deduction is bigger and permanent. For 2025, Married Filing Jointly (MFJ) $31,500; Head of Household (HOH) $23,625; Single/ Married Filing Single (MFS) $15,750.  

These higher amounts don't sunset after 2025. Pair that with the repeal of personal exemptions (permanent) and the temporary senior add-on, and you'll want to refresh withholding and estimated tax guidance for retirees and near-retirees. 

SALT cap relief—but read the fine print. From 2025 through 2029, the SALT cap lifts to $40,000 ($20,000 MFS), then snaps back to $10,000 in 2030. The temporary cap is trimmed for high-MAGI households and never drops below $10,000: you should model bunching strategies and multi-year timing around that phase-down rule. 

Mortgage interest stays constrained. Acquisition indebtedness only; the $750,000 ceiling is permanent. Home equity interest is out. Expect more clients asking whether a cash-out refi is deductible (it's not, unless it's acquisition debt). 

Two temporary deductions are now in effect, and your payroll clients will ask about:

1. "No Tax on Tips." 2025–2028 deduction for qualified tips, capped at $25,000, with Modified Adjusted Gross Income (MAGI) phase-outs and strict W-2/1099 reporting ties. SSN must be on the return. Build employer communications now—eligibility hinges on proper reporting.  
2. "No Tax on Overtime." 2025–2028 deduction for Fair Labor Standards Act (FLSA) mandated overtime, capped at $12,500 ($25,000 MFJ) with similar phase-outs and reporting. Tighten W-2 box codes and payroll interfaces. 

New personal-use car loan interest deduction (temporary). Up to $10,000 for interest on post-2024 loans for new passenger vehicles finally assembled in the U.S. (through 2028). Lenders carry new information-reporting burdens—watch your 1099 intake workflows. 

Charitable giving shifts. In 2026, non-itemizers can claim up to $1,000 ($2,000 MFJ) in cash gifts; itemizers face a 0.5% floor. That changes how you advise moderate-income donors in non-bunching years. 

Casualty/theft losses. The disaster limitation is permanent and has been extended to certain state-declared disasters. Update your disaster-year checklists. 

Estate, gift, and GST. The unified amount jumps to $15 million (pre-inflation) for transfers after 2025—revisit lifetime gifting, Spousal Lifetime Access Trusts (SLATs), and freeze partnerships before year-end 2025 and again in early 2026 when the new base applies. 

Investors and founders: QSBS, Opportunity Zones, and farmland exits 

Qualified Small Business Stock (QSBS) is retuned for stock acquired after July 4, 2025: 50% exclusion at 3 years, 75% at 4, 100% at 5+, with a higher per-issuer cap ($15 million) and larger asset ceiling ($75 million). Cap tables for late-stage rounds should reflect the new thresholds; build holding-period trackers that don't assume a flat 100% after five years for older lots. 

Qualified Opportunity Zones become permanent with rolling 10-year designations starting January 1, 2027, a rolling gain deferral rule, and a permanent 10% basis step-up. They also have stricter designation criteria and new rural funds, matched with tighter reporting and penalties. If you manage OZ funds, compliance infrastructure is no longer optional. 

Farmland gain installment option. Elect to spread gain over four equal annual installments on sales to a qualified farmer for tax years beginning after July 4, 2025. Add this to exit-planning menus for family operations, consolidating acreage.

Family credits and exclusions: More value, tighter IDs

The child tax credit rises to $2,200 per qualifying child for 2025 and is indexed thereafter. ODC and the $400k/$200k phase-outs are permanent. ACTC limits and the $3,000 earned income threshold are permanent. SSNs (work-eligible) are mandatory for the child and at least one spouse on joint returns. Bake SSN checks into your client organizers. 

Dependent care assistance exclusion increases to $7,500. Employer education assistance (including student loan payments) is permanent and indexed after 2026—HR clients should revisit plan documents. Student loan discharge for death/disability remains excluded from income, with SSN requirements. 

Savings and health. New child "Trump accounts" (IRA-like) with a pilot seeding $1,000 for children born 2025–2028; ABLE rollovers from 529s are permanent; telehealth and certain plan types won't spoil HSA status; direct primary care can coexist with HSAs. Add plan compatibility reviews to annual benefits checkups.  

Businesses: Capital cost recovery, Section 163(j), and QBI, this is where the money is

100% bonus depreciation is back for qualified property acquired and placed in service after January 19, 2025; specified plants also qualify. Certain "qualified production property" gets 100% if constructed after that date and placed in service before 2031 (with U.S. siting/original-use requirements). Pair this with a larger Section 179 – now $2.5 million with a $4 million investment ceiling (inflation-indexed after 2025) – and you've got a powerful capital-spending window. Refresh cost segregation assumptions and safe-harbor elections. 

Section 174 is fixed; domestic Research and Experimental (R&E) is immediately deductible for tax years beginning after 2024; foreign R&E is still amortized over 15 years. Reopen 2025 quarterly estimates for tech, life sciences, and manufacturing clients that had been capitalizing. 

Author Note: On August 28, 2025, the IRS issued Rev. Proc. 2025-28, updating the rules for how small businesses can deduct domestic R&E costs under the OBBBA. More details will follow on our new tab in the Resource Page but note that to take advantage of this immediate deduction, S corporations and partnerships generally must file by Sept. 15, 2025; C corporations have until Oct. 15, 2025

Section 163(j) reverts to EBITDA for ATI in 2025, with clarifications for foreign-income inclusions and floor-plan financing (trailers/campers now in scope). Compute the cap before any interest capitalization rules—update your models and ASC 740 interactions. 

QBI (199A) is permanent, with modified phase-ins and a new inflation-adjusted minimum deduction starting after 2025. For S corp/partnership owners, build side-by-side projections comparing wage/UBIA tactics and reasonable-compensation policies for 2026 filings. 

Corporate charitable giving is squeezed by a 1% floor and the traditional 10% cap, with first-in, first-out carryforwards and special rules for what can be carried. Finance teams need new playbooks for year-end giving. 

Meals at employer convenience become non-deductible starting in 2026 (with limited vessel/rig exceptions). The 50% exception expands to crews on commercial fishing vessels. Budget impacts are real for companies with on-site kitchens. 

The excess business loss limitation for non-corporate taxpayers is permanent—plan around NOL creation and entity choice. The $1 million compensation cap (162(m)) now aggregates across controlled groups starting after 2025. 

Odds and ends that matter: 179D (energy-efficient commercial buildings) terminates for projects beginning construction after June 30, 2026; residential construction gets relief from percentage-of-completion rules; Section 707 recharacterization mechanics become self-executing; PTP qualifying income is broadened to new energy/industrial activities; Corporate Alternative Minimum Tax (CAMT) AFSI gets IDC/depletion adjustments; REITs can hold up to 25% of assets in TRSs. Audit your industry-specific clients for exposures and opportunities. 

Energy credits: deadlines, design bans, and foreign-entity restrictions

Several personal energy credits end after 2025 (25C home improvements, 25D residential clean energy), and the 30D/25E vehicle credits end for vehicles acquired after Sept. 30, 2025; refueling property (30C) sunsets for property placed after June 30, 2026. Commercial/utility-scale rules also tighten, with earlier phase-outs or exclusions for wind/solar placed after specific dates and prohibited foreign entity (PFE) restrictions that can disqualify projects or block credit transfers. If your clients develop or finance energy projects, run eligibility and supply-chain questionnaires now. 

Clean fuel production (45Z) extends through 2029, with North American feedstock rules, SAF rate changes, and transfer restrictions for specified foreign entities. 45Q (carbon capture) raises the utilization rate to match disposal, with PFE and credit-transfer limits after mid-2025. These changes are granular; build a matrix per project with "start-of-construction" and counterparty-status checkpoints.

Employment credits and enforcement 

FICA tip credit expands to certain beauty service businesses. Employer-provided child care credit increases to 40% (up to $500,000, more for small businesses) after 2025; small businesses may jointly own/operate facilities. Paid family and medical leave credit (45S) becomes permanent and more flexible. Put these in front of owners who routinely ask how to recruit and retain workers without bloating base pay. 

ERC enforcement is now explicit: a new promoter penalty, a six-year assessment period, and a hard stop on late claims. If you have lingering ERC files, close them out and document your due diligence standard.

International: FDII/GILTI rebuilt, BEAT steadied, and source rules tweaked

FDII is re-cast as a foreign-derived deduction eligible income (FDDEI) deduction at 33.34%, matched by a 40% deduction for net CFC tested income. A straight inclusion of net CFC replaces GILTI/NDTIR/QBAI constructs tested income for U.S. shareholders beginning after 2025. Deemed-paid foreign tax credits rise to 90% (but no FTC on distributions of previously taxed tested income). The BEAT rate is pinned at 10.5%. These rules alter modeling for outbound groups and eliminate old "QBAI/DTIR" levers. 

Inventory source-of-income rules permit up to 50% of U.S.-produced inventory sold abroad to be foreign-source (facts and office attribution matter). The one-month deferral for specified foreign corporations is repealed—start aligning foreign subs to the majority U.S. shareholder year after Nov. 30, 2025.  

Reporting, excise, and third-party settlement clean-up

Information reporting thresholds jump to $2,000 for 1099-MISC/NEC and backup withholding triggers starting in 2026. Third-party settlement (1099-K) reverts to the $20,000/200-transaction de minimis, with aligned backup-withholding rules. Update payer onboarding, W-9 collection, and payee communications; many small platforms will rely on your checklists. 

A new 1% excise tax on certain cross-border remittances (paid by the sender and collected by the transfer provider) begins after 2025, with carve-outs for card-funded and certain account withdrawals. If you serve MSBs or fintechs, this is a systems project, not a footnote.

What to do now: Firm-level actions

Client segmentation and outreach (this quarter).

Individuals (W-2 + investment): Promote withholding updates, SALT cap planning for 2025–2029, and senior-deduction eligibility screens. Also, promote donor-year calendars for 2026's non-itemizer giving and itemizer floors. 

Owners and founders: Map QSBS lot dates (pre/post 7/4/2025), OZ deferral and rural-fund opportunities, and farmland installment elections. 

Operating businesses: Refresh 2025–2026 capex using 100% bonus + 179, re-model 163(j) under EBITDA, reopen Section 174, and revisit entity choice given permanent EBL and 199A. 

Energy/real-assets clients: Build start-of-construction timelines, test for PFE taint, and audit credit transfer plans. 

Global groups: Replace GILTI/FDII models with FDDEI + net CFC-tested income frameworks; revise FTC positions to 90%; scrub SFC year-ends. 

Workflow and technology.

Update organizers to capture SSNs for all credit-relevant dependents, W-2 tip/overtime boxes, vehicle final-assembly attestations, lender 1099 interest statements, and dependent-care and education-assistance benefits. 

Overhaul 1099 engines for the $2,000 threshold and 1099-K reversion. Add remittance-excise logic for fintech/MSB clients. 

Policy documents and pricing 

Add an ERC-representation clause (and promoter red-flags) to engagement letters; set fees for 163(j) and 174 restatements; build tiered pricing for energy-credit diligence.

Training

Run a partner-level CPE on 199A permanence, 163(j) modeling, and FDDEI/CFC tested income.  

Do a staff-level session on tips/overtime deductions and SALT cap interactions with bunching. 

Client-ready talking points (drop into emails or webinars)

1. Your 2025 standard deduction goes up; exemptions stay gone. We'll recalibrate your withholding and quarterly estimates accordingly. 
2. SALT cap relief exists for 2025–2029 but phases down for high MAGI; we'll model multi-year bunching. 
3. 100% bonus is back for post-1/19/2025 assets; pair with higher Section 179 to accelerate your capex plan. 
4. Domestic R&E is immediately deductible again starting in 2025—expect lower cash taxes; we'll update forecasts. 
5. Overtime and tip deductions are available 2025–2028 if properly reported; payroll configuration matters. 
6. Child credit climbs to $2,200 in 2025 and is indexed; SSNs are mandatory. 
7. Energy credit deadlines are real; some credits terminate after 2025, and PFE rules can disqualify projects. 
8. International rules change the math: FDDEI replaces FDII, GILTI constructs give way to net CFC tested income, and FTCs move to 90%. 

Red-flag risks if you wait

1. The 100% bonus window on significant assets was missed because procurement slipped past eligibility dates. 
2. Over/under-withholding for retirees and high-earners due to the standard deduction and SALT interactions. 
3. ERC exposure if files aren't cleaned up under the longer assessment period and promoter penalty regime. 
4. Energy project disqualification from PFE involvement or improper lease structures. 
5. International misalignment if SFCs don't shift year-ends and models still assume DTIR/QBAI mechanics. 

NOTE: On August 28, 2025, the IRS issued Rev. Proc. 2025-28, updating the rules for how small businesses can deduct domestic R&E costs under the OBBBA. More details will follow on our new tab in the Resource Page but note that to take advantage of this immediate deduction, S corporations and partnerships generally must file by Sept. 15, 2025; C corporations have until Oct. 15, 2025.

A concise planning calendar

Q4 2025: Capex and placed-in-service sprints; Section 174 re-forecast; W-4/wage planning for 2026; vehicle purchase timing. 

Early 2026: AMT checks under the new thresholds; SALT bunching models; adoption of revised 163(j) and 199A rules; employer meal policy changes for deductibility. 

2027–2029: Monitor SALT cap phase-downs, OZ rolling designations, and ongoing credit terminations or restrictions. 

Bottom line: The OBBBA is not a tweak; it's a structural reset with real cash-tax consequences for clients and real workflow consequences for firms. Lock in a phased plan—retool your models, retrain your teams, and start the client conversations now. Your strongest advisory work over the next four filing seasons will come from executing on these specifics, not reacting to them.