One Big Beautiful Bill Act: Detailed Tax Changes for 2025

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (H.R. 1) into law, a comprehensive tax reform passed through budget reconciliation. This legislation extends and modifies key provisions of the 2017 Tax Cuts and Jobs Act (TCJA), introduces new tax incentives, and adjusts certain Inflation Reduction Act (IRA) credits. Below is a detailed summary of the key changes impacting individuals and businesses, designed to help you understand and plan for these updates.

For Individuals

• Permanent Tax Rate Reductions: The TCJA’s reduced individual income tax rates, originally set to expire after 2025, are now permanent. Rates remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%, with adjusted income brackets for inflation, ensuring long-term tax savings.
• Standard Deduction and SALT Cap: The TCJA’s increased standard deduction ($12,550 for single filers, $25,100 for joint filers in 2025, indexed for inflation) is made permanent, while personal exemptions remain eliminated. The state and local tax (SALT) deduction cap, previously $10,000, is temporarily raised to $20,000 through 2030, offering relief in high-tax states.
• Estate and Gift Tax Exemption: Starting in 2026, the estate and gift tax exemption increases to $15 million for single filers and $30 million for joint filers, with annual inflation adjustments. The 40% top tax rate remains unchanged.
• Alternative Minimum Tax (AMT): The TCJA’s higher AMT exemptions and phase-out thresholds are extended permanently, reducing AMT liability for many taxpayers.
• Mortgage Interest Deduction: The deduction for mortgage interest is permanently limited to interest on $750,000 of home acquisition debt for primary and secondary residences, with no deduction for home equity loan interest.

For Businesses

• Immediate R&D Expensing: Reverses the TCJA’s requirement to amortize research and development (R&D) costs over five years. Businesses can now fully expense R&D costs in the year incurred through 2026, incentivizing innovation and reducing taxable income.
• Bonus Depreciation: Restores 100% bonus depreciation for qualified property placed in service through 2026, allowing businesses to immediately deduct the full cost of eligible assets like machinery and equipment.
• Section 179 Expensing: Increases the Section 179 expensing limit to $2.5 million (from $1 million) with a phase-out threshold of $4 million, both indexed for inflation, enabling small and mid-sized businesses to deduct more capital investments upfront.
• Qualified Business Income (QBI) Deduction: The TCJA’s 20% QBI deduction for pass-through entities (e.g., S corporations, LLCs) is made permanent. The deduction phase-in range is expanded, and a new $400 minimum deduction applies for eligible taxpayers with lower incomes, broadening access to this benefit.
• Qualified Opportunity Zones: Extends the TCJA’s Opportunity Zone program permanently, encouraging investment in designated economically distressed areas through tax deferrals and potential gain exclusions.

Energy and Other Credits

• Phase-Out of IRA Clean Energy Credits: Accelerates the phase-out of select clean energy tax credits from the Inflation Reduction Act, with most credits expiring by 2028 instead of 2032, impacting renewable energy projects.
• Section 45L Credit: Extends the enhanced energy-efficient residential property credit through 2026, offering up to $2,500 per unit for developers building energy-efficient homes meeting specific standards.
• Other Credits: Retains certain TCJA credits, such as the Child Tax Credit, with minor adjustments to income phase-outs, and introduces no significant new credits.

Planning Opportunities

• Act Now on Time-Limited Provisions: The R&D expensing and bonus depreciation provisions expire in 2026, making it critical for businesses to accelerate investments to maximize deductions.
• Review Estate Plans: Higher estate and gift tax exemptions provide opportunities for wealth transfer strategies, particularly for high-net-worth individuals.
• Optimize SALT Strategies: The increased SALT cap through 2030 offers temporary relief, but taxpayers in high-tax states should plan for its potential reversion.
• Leverage QBI and Opportunity Zones: Businesses should evaluate eligibility for the permanent QBI deduction and Opportunity Zone benefits to reduce tax liability.

Why It Matters

The One Big Beautiful Bill Act offers significant tax savings and planning opportunities but requires careful navigation due to temporary provisions and complex interactions with existing tax rules. Our firm is ready to assist with tailored strategies to optimize your tax position under this new law.

Contact us to schedule a consultation and ensure your financial plan aligns with these changes!

One Big Beautiful Bill: Key Tax Changes for 2025

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (H.R. 1) into law, introducing significant tax reforms that impact individuals and businesses. This landmark legislation, passed via budget reconciliation, extends and modifies provisions from the 2017 Tax Cuts and Jobs Act (TCJA) while introducing new incentives. Below is a concise summary of the key provisions to help you navigate these changes.

For Individuals

• Permanent Tax Cuts: Extends TCJA’s reduced tax rates, originally set to expire in 2025, ensuring long-term savings.
• Standard Deduction & SALT Cap: Permanently expands the standard deduction, eliminates the personal exemption, and temporarily increases the state and local tax (SALT) deduction cap.
• Estate & Gift Tax: Increases exemption to $15M for single filers ($30M for joint filers) starting 2026, with inflation adjustments.
• AMT and Mortgage Interest: Permanently extends the TCJA’s higher alternative minimum tax (AMT) exemptions and limits mortgage interest deductions to $750,000 of home acquisition debt.

For Businesses

• R&D Expensing: Reverses TCJA’s amortization rule, allowing immediate expensing of research and development costs through 2026, boosting innovation.
• Bonus Depreciation & Section 179: Restores 100% bonus depreciation and expands Section 179 expensing to $2.5M with inflation adjustments.
• QBI Deduction: Makes the 20% qualified business income (QBI) deduction permanent, with an expanded phase-in range and a $400 minimum deduction for eligible taxpayers.
• Opportunity Zones: Permanently extends Qualified Opportunity Zones to encourage investment.

Energy Credits

• Phase-Out of IRA Credits: Accelerates the phase-out of certain clean energy tax credits from the Inflation Reduction Act.
• 45L Credit: Extends the enhanced energy-efficient residential property credit through 2026, benefiting developers.

Why It Matters

These changes offer opportunities for tax savings and strategic planning but require proactive steps to maximize benefits, especially for time-limited provisions like R&D expensing and energy credits. Our firm is here to guide you through these updates to optimize your tax strategy.

Contact us today to discuss how the One Big Beautiful Bill Act impacts your financial future!