Ian here from Waldman Accounting. I’m reaching out to share a major tax update that could significantly impact your financial planning: the One Big Beautiful Bill Act (OBBBA). This newly introduced legislation brings sweeping changes to both individual and business taxes, some of which could take effect as early as this year.
Important: This is not a political post—our goal is to keep you informed and prepared for potential tax impacts.
Let’s take a closer look at how this legislation could affect your personal or business tax strategy.
Individual income tax changes
Permanent extension of lower tax rates and brackets
The OBBBA makes the tax brackets introduced in the 2017 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
Standard deduction
With the OBBBA, the nearly doubled standard deduction would be made permanent. Effective 2025, the amounts are:
- Single and Married Filing Separately (MFS): $15,750 (indexed)
- Head of Household (HOH): $23,625 (indexed)
- Married Filing Jointly (MFJ): $31,500 (indexed)
“Indexed” means that a dollar amount—such as a tax deduction, credit, or income threshold—will be automatically adjusted over time to keep pace with inflation. If tax brackets or deductions were fixed and not adjusted, people could end up paying more taxes simply because their income increased due to inflation—not because they actually became wealthier.
Example: Let’s say the standard deduction is $15,750 and it’s indexed for inflation. If inflation is 3% next year, the deduction might rise to around $16,222 the following year.
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.
Estate & gift tax exemption
The increased exemption is set to rise permanently in 2026 to the following and is indexed for inflation:
- $15 million per individual
- $30 million for married couples
SALT deduction cap
The State and Local Tax (SALT) deduction cap increases under OBBBA 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 reverts to $10,000.
Charitable deduction for non-itemizers
An above-the-line deduction is added for charitable contributions starting in 2024:
- $1,000 for single filers
- $2,000 for joint filers
Deductions for tips and overtime
From 2025–2028, eligible occupations can deduct tips and overtime premium pay—subject to income and job type restrictions.
Enhanced deduction for seniors
From 2025–2028, individuals aged 65+ can deduct up to $6,000 if income is below:
- $75,000 for single filers
- $150,000 for joint filers
Car loan interest deductions
Deduct up to $10,000 in interest on loans for U.S.-assembled passenger vehicles from 2025–2028, subject to income phaseouts.
Moving expense deduction
The deduction is permanently terminated, except for those in the Armed Forces.
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.
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.
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.
Business tax provisions
QBI deduction made permanent
The 20% Qualified Business Income (QBI) deduction remains intact for qualifying entities.
100% bonus depreciation restored
100% expensing (bonus depreciation) is restored for qualified property placed in service after January 19, 2025.
Section 179 expensing expanded
The maximum amount a business may expense for qualifying property is increased to $2.5 million, with the phaseout threshold raised to $4 million—both indexed for inflation after 2025.
R&E expense deductions
Immediate deduction of domestic research or experimental expenses paid or incurred in 2025 is allowed.
However, research or experimental expenses attributable to research conducted outside the United States must continue to be capitalized and amortized over 15 years.
Excess business loss rule becomes permanent
The excess business loss limitation is made permanent, and the existing treatment of loss carryforwards is maintained.
EBITDA-based interest deduction
The interest expense limitation is calculated using earnings before interest, taxes, depreciation, and amortization (EBITDA), rather than EBIT.
FDII & GILTI deduction reductions
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).
BEAT rate increase
The Base Erosion and Anti-Abuse Tax (BEAT) rate is increased from 10% to 10.5%.
Third-Party network transaction reporting threshold
1099-K reverts back to previous rules— reporting is required for over $20,000 in payments and more than 200 transactions.
Form 1099 reporting threshold
The information reporting threshold for payments for services increases to $2,000 in a calendar year (up from $600) beginning in 2026. The threshold will be indexed annually for inflation starting in 2027.
Renewed opportunity zones
Opportunity Zone provisions are made permanent but with several changes, including narrowing the definition of a “low-income community.” Changes will generally take effect in 2027.
Clean energy and IRS credits
Several clean energy credits from the Inflation Reduction Act (IRA) are terminated.
Questions? Let’s talk.
The One Big Beautiful Bill Act represents one of the most comprehensive tax law shifts in years. Whether you’re a business owner, individual taxpayer, or both, these changes could significantly alter your tax strategy.
We’re here to help you understand how these updates apply to your unique situation. Feel free to contact us with any questions or to schedule a personalized tax planning session: ianwaldman@waldmanaccounting.com.
Stay tuned for additional updates.
— Ian and the Waldman Accounting Team