The One Big Beautiful Bill Act (formally termed “The Act”), signed into law on Friday, July 4, by President Donald Trump, extends key provisions of the Tax Cuts and Jobs Act (TCJA) and addresses several tax priorities of the Trump administration. The bill cleared the House on Thursday, July 3, by a narrow 218–214 margin, and passed the Senate earlier that week on Tuesday, July 1, by a 51–50 vote, with Vice President JD Vance breaking the tie. Among its major provisions, The Act offers deductions to eliminate income taxes on certain tips and overtime pay, enhances small business tax relief, and repeals numerous clean energy tax incentives.

Individual Tax Provisions

• Tax Rates & Brackets: Permanently extends TCJA rates (10%, 12%, 22%, 24%, 32%, 35%, 37%) with the lowest three bracket thresholds adjusted annually for inflation. In 2025, the 12% bracket ends at $60,000 for single filers and $120,000 for joint filers.
• Standard Deduction: Permanently increases deductions to $15,750 (single), $23,625 (head of household), $31,500 (married) for 2025, with future inflation adjustments.
• SALT Cap: Temporarily raises the state and local tax deduction limit to $40,000 through 2029, reverting to $10,000 in 2030. The increased deduction phases out between $500,000 and $600,000 of MAGI.  Taxpayers with a MAGI above $600,000 are limited to $10,000. PTET SALT deductions are still allowed and unaffected by the new law.
• Senior Deduction: The Act provides a $6,000 deduction for individual taxpayers who are aged 65 or older from 2025-2028. The deduction begins phasing out when a single taxpayer’s MAGI exceeds $75,000 ($150,000 married filing jointly).
• Child Tax Credit: Raises the nonrefundable credit permanently to $2,200, with $1,400 refundable; maintains the income phaseout at $200,000 single/$400,000 married filing jointly. The Act permanently extends the $500 non-child dependent tax credit.
• QBI Deduction: Permanently extends 20% qualified business income deduction, expands phase-out ranges for SSTBs, and adds a $400 minimum deduction for all small businesses with at least $1,000 of active QBI.
• Estate & Gift Tax: Permanently extends the increased exemption that was set to expire after 2025, resetting the exemption amount to $15 million ($30 million for joint filers) starting in 2026, with future inflation adjustments.
• AMT: Permanently extends increased AMT exemptions and adjusts phaseout rates for high-income taxpayers ($500,000 single/$1 million joint, inflation-adjusted).
• Mortgage Interest: Keeps $750,000 mortgage debt limit and excludes home-equity loan interest from qualified residence interest.
• Miscellaneous Deductions: Permanently suspends most miscellaneous itemized deductions, including unreimbursed expenses of W-2 employees, investment advisor fees, and tax return preparation fees; allows educators to continue deducting unreimbursed expenses.
• Itemized Deduction Limits: Eliminates the suspended Pease limitation; introduces a new formula reducing deductions for high-income taxpayers in 2026.
• Moving Expenses: Permanently repealed the moving deduction, except for active-duty military personnel and certain members of the intelligence community.
• Wagering Losses: Limits deduction to 90% of gambling losses, only deductible up to gambling winnings starting in 2026.
• ABLE Accounts & Student Loans: Permanently extends higher ABLE contribution limits and allows contributions to qualify for the Saver’s Credit; keeps student loan discharge exclusion for death or disability.
• Tips & Overtime: Temporarily allows above-the-line deductions for up to $25,000 in tips and $12,500/$25,000 in overtime (single/joint) through 2028, phased out starting at $150,000/$300,000 (single/joint) MAGI.
• Car Loan Interest: Allows a deduction for up to $10,000 of U.S.-assembled personal-use, passenger vehicle loan interest through 2028; phases out for MAGI over $100,000/$200,000 (single/joint).
• Adoption & Child Care: Makes $5,000 of adoption credit refundable; raises dependent care assistance exclusion to $7,500; child/dependent care credit permanently increased to 50% of expenses, phasing down for AGI above $15,000.
• Trump Accounts: Creates tax-free accounts for minors, acting like Traditional IRAs with $5,000 annual contribution limits; includes $1,000 credit for accounts opened for children born 2025–2028.
• Scholarships & 529 Plans: Provides nonrefundable credits for donations to scholarship-granting organizations; expands 529 plans to cover more K-12 and credentialing expenses.
• Charitable Contributions: Allows non-itemizers to deduct up to $1,000 or $2,000 (single or joint) for donations starting in 2026; itemizers face a small floor (0.5%) on deductions.
• Personal Casualty and Theft Loss Deduction: Makes permanent that personal casualty losses from federally and state-declared disaster areas are offset by any individual personal casualty gains.

Business Provisions

• Bonus Depreciation & Section 179 Expensing: Permanently extends 100% bonus depreciation for assets placed in service after Jan. 19, 2025; raises Sec. 179 expensing to $2.5 million with a $4 million phaseout for assets placed in service in 2025.
• R&D Expenses: Domestic research and development costs can be immediately deducted starting in 2025; foreign R&D must still be amortized over 15 years. Small businesses (with gross receipts under $31 million) can retroactively apply the deduction for tax years 2022-2024. Any taxpayers who amortized R&D between 2022–2024 can accelerate remaining deductions over the next 1–2 years. Businesses must segregate domestic versus foreign R&D and coordinate with R&D credits.
• Interest Limitation: Restores EBITDA-based limit for interest deductions starting 2025.
• Paid Leave & Child Care: Makes employer credit for paid family/medical leave permanent; increases employer-provided childcare credit maximum from $150,000 to $500,000/$600,000 (small businesses) starting in 2026.
• Manufacturing & Depreciation: Adds 100% special depreciation for qualified production property and raises the advanced manufacturing investment credit to 35% starting in 2026.
• Opportunity Zones & New Markets: Makes both incentives permanent; updates opportunity zone definitions starting in 2027.
• Residential Construction: Exempts certain residential projects from percentage-of-completion accounting.
• QSB Stock: Increases Sec. 1202 small business stock exclusion to 75% (4-year hold) or 100% (5+ years).
• Excess Business Losses: Permanently extends limits on non-corporate excess business losses.
• Employer Meals Expense: Notably, The Act does not extend the 50% deduction for employer-provided meals, which is scheduled to phase out after 2025.

Clean Energy Changes

• Ends numerous clean energy credits for vehicles, efficiency, hydrogen, and aviation fuel between 2025–2028.
• Phases out the wind and solar clean electricity credits after 2027; imposes restrictions on foreign entities for nuclear energy credits.

Administrative & Other Provisions

• Reporting Thresholds: Restores $20,000 and 200-transaction thresholds for Form 1099-K; raises Form 1099-MISC 2026 threshold from $600 to $2,000, inflation-adjusted after 2026.
• Firearms & Farmland: Lowers firearms transfer tax; allows farmland sellers to pay taxes in four annual installments to qualified farmers.
• Remittance Tax: Imposes 1% tax on certain cash-based remittance transfers.

 

Please contact your Dent Moses advisor if you would like more specific information about any of the above provisions.