The One Big Beautiful Bill Recap

After much deliberation and negotiation between Congress and the White House, President Trump signed the One Big Beautiful Bill Act, a sweeping tax-and-spending package slashing social programs, boosting defense, and reshaping the economy, on Friday July 4th.

With many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) set to sunset at the end of 2025, this piece of legislation gives clarity to taxpayers while also enacting some new provisions.

See below for a recap of some of the most impactful tax provisions in this bill. Each of these provisions has different thresholds, limitations, and planning opportunities, so please reach out if you have any questions on how it may impact you.

Permanent Extension of TCJA Provisions

• Tax brackets remain the same as they have been since 2018
• Standard deduction amount remains at increased amount
• Estate and gift exemption increased to $15 million per individual
• Section 199A/Qualified Business Income Deduction remains at 20%
• Excess Business Loss limitations are made permanent with excess losses continuing to be treated as Net Operating Losses

New Business Provisions

• Permanent 100% bonus depreciation for qualified property acquired after January 19, 2025
• Reinstates and makes permanent the deduction for domestic research and experimental costs incurred after 2024. Also, there are additional ways to accelerate deductions for capitalized costs from 2022-2024.
• Increased amounts and thresholds for Section 179 expensing starting January 1, 2025
• Restores and makes permanent the more favorable EBITDA-type calculation of the business interest expense deduction limit for tax years beginning in 2025
• Creates a 1% floor for corporate charitable deductions making only contributions in excess of 1% of taxable income deductible

New Individual Provisions

• State and local tax (SALT) limit increased to $40,000 through 2029 but a reduction once AGI reaches $500,000 and avoids any limitation on SALT cap workarounds.
• Creates a 0.5% floor for individual charitable deductions making only contributions in excess of 0.5% of taxable income deductible for those itemizing deductions while also allowing up to a $2,000 charitable contribution for non-itemizers.
• Additional $6,000 deduction for seniors 65 and older if AGI is under $75,000 ($150,000 for joint filers)
• Improves the exclusion of gain from the sale of qualified small business stock by increasing the total amount that can be excluded and reducing the holding period requirements.
• New deduction, up to $25,000, for amounts received as tips for certain service-based industries if AGI is under $150,000 ($300,000 for joint filers)
• New deduction, up to $12,500, for overtime compensation if AGI is under $100,000 ($200,000 for joint filers)

Miscellaneous Provisions

• Termination of Sec. 179D, Energy efficient commercial buildings deduction, for property that begins construction after June 30, 2026
• Termination of Energy Efficient Home Improvement and Residential Clean Energy Credit for property placed in service after December 31, 2025
• Termination of Clean Vehicle Credit for vehicles acquired after September 30, 2025
• “Trump Accounts” are established which can serve as a tax-advantaged investment vehicle for children. The government will contribute $1,000 to an account for children born between Dec. 31, 2024 and Jan. 1, 2029
• Potential to deduct up to $10,000 in automobile loan interest if purchasing an American-assembled vehicle after 2024
• Form 1099 reporting threshold increased from $600 to $2,000
• Opportunity zones are made permanent but will work differently than the ones created under the TCJA
• The US International tax framework received substantial modifications including changes to Foreign Tax Credits (FTC), Global Intangible low-tax income (GILTI), Foreign derived intangible income, and the  Base erosion and anti-abuse tax (BEAT).

Are you staying ahead? Consult your Wilkins Miller advisor to make the most of tax changes and updates.