On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBB) into law. This reconciliation bill makes major parts of the Tax Cuts and Jobs Act (TCJA) permanent, tweaks key deductions and credits, rewrites some international rules, and eliminates or scales back many clean energy tax incentives.
Below is a detailed breakdown — individuals, estates, businesses, international tax, and more — so you can see exactly what’s changing, what’s staying, and what you should plan for.
⚡ Individual Tax Changes
✅ Individual Tax Rates & Standard Deduction
TCJA’s lower graduated rates are now permanent.
An extra year of inflation adjustment applies for where the 12% and 22% brackets end/start.
Standard deduction amounts are now permanent and increased to:
$15,750 single
$23,625 head of household
$31,500 married filing jointly (all indexed for inflation, retroactive to include 2025).
✅ SALT Deduction Cap
The SALT cap rises to $40,000 (from $10K) through 2029.
Phasedown: For taxpayers with MAGI over $500K, the deduction phases down by 30% of the excess but can’t go below $10K.
In 2030, the cap reverts to $10K.
The final version keeps PTET SALT deduction workarounds intact — a big win for pass-through businesses in high-tax states.
✅ Personal Exemptions & Senior Deduction
Personal exemptions remain at zero.
But there’s a new temporary $6,000 deduction for taxpayers age 65+, phasing out for MAGI over $75K ($150K joint). This runs 2025–2028.
✅ Child & Dependent Credits
Nonrefundable child tax credit increased to $2,200 per child, indexed for inflation.
The $1,400 refundable portion stays permanent.
Phaseouts remain higher ($200K single / $400K joint).
$500 nonrefundable credit for dependents other than qualifying children stays permanent.
Child & Dependent Care Credit: Increases to 50% of expenses (up from 35%), with phaseouts at AGI over $15K, stepping down to 20% for AGI over $75K.
✅ Qualified Business Income (QBI) Deduction
The 20% QBI deduction under Sec. 199A is permanent.
Phase-in thresholds for SSTBs and wage/investment limits increase:
Non-joint returns: $50K → $75K
Joint returns: $100K → $150K
New inflation-adjusted $400 minimum deduction for taxpayers with $1K+ of active QBI.
✅ Mortgage & Casualty Loss Deductions
$750K mortgage interest cap made permanent; home equity loan interest stays excluded.
Personal casualty loss deduction stays limited to federally declared disasters — now expanded to include some state-declared disasters too.
✅ Alternative Minimum Tax (AMT)
TCJA’s increased AMT exemption amounts are now permanent.
Phaseout thresholds revert to 2018 levels but phase out at 50% instead of 25%.
🕵️♂️ Special Temporary Deductions
No Tax on Tips: Up to $25,000 above-the-line deduction for qualified tips (2025–2028).
No Tax on Overtime: Up to $12,500 ($25K joint) above-the-line deduction for qualified overtime pay, same years.
Both phase out for MAGI over $150K ($300K joint).
Car Loan Interest: Excludes up to $10K/year in interest on certain US-assembled personal vehicles (2025–2028).
🎓 Education & Family
Student Loan Debt Discharge: Permanent exclusion from income for debt discharged due to death or disability.
529 Plans: Broader allowed uses for elementary/secondary and new postsecondary credentialing expenses.
ABLE Accounts: Increased contribution limits and permanent saver’s credit eligibility.
Adoption Credit: Up to $5K is refundable.
Trump Accounts: New minor-only IRAs (not Roths), contributions up to $5K/year (adjusted for inflation). Employer and government/charity funding allowed.
💵 Charitable Contributions
New charitable deduction for non-itemizers: $1K single / $2K joint.
New 0.5% floor for itemizers: donations reduced by 0.5% of AGI.
Corporate floor: 1% of taxable income.
New Sec. 25F credit for donations to scholarship-granting organizations, up to the greater of $5K or 10% of AGI.
🏡 Other Individual Provisions
Pease limitation permanently replaced with a 2/37 overall limit for high earners.
Miscellaneous itemized deductions stay suspended except for unreimbursed educator expenses.
Moving expense deduction stays eliminated except for military/intelligence.
Wagering Losses: Now capped at 90% of gambling winnings.
⚰️ Estate, Gift & Generation-Skipping
Estate & gift tax exemption: $15M single / $30M joint starting 2026, indexed for inflation.
Small but significant: this is above the old TCJA sunset level.
✅ Key Business Provisions
✔️ Bonus Depreciation & Sec. 179
100% bonus depreciation permanent for qualifying property acquired after Jan 19, 2025.
Sec. 179 limit up to $2.5M, phaseout above $4M.
✔️ R&D Expensing
Domestic R&D fully deductible again.
Small businesses (<$31M gross receipts) can apply retroactive elections back to 2021.
Foreign R&D must still be amortized over 15 years.
✔️ Interest Deductions
EBITDA limitation under Sec. 163(j) reinstated for tax years after 2024.
Special rule for floor plan financing expanded.
✔️ Specialized Credits
Paid family/medical leave credit made permanent.
Employer child care credit increased from $150K to $500K ($600K for small businesses).
New spaceport facilities can use exempt-facility bonds.
Farmland sales to qualifying farmers: income tax can be paid over 4 years.
Opportunity Zones & New Markets Credit both made permanent.
Small biz stock (QSBS) gain exclusion increased: 75% if held 4 years, 100% if held 5+ years.
✔️ International Provisions
GILTI & FDII deduction percentages drop:
FDII: 33.34% → 14% effective rate
GILTI: 40% → 14% effective rate
BEAT rate rises to 10.5%.
Deemed paid credit for Subpart F up to 90% (was 80%).
Complex foreign tax credit tweaks to align with new “net CFC tested income.”
✔️ Administrative & Compliance
1099-K reporting threshold: stays at $20K/200 transactions.
General 1099 threshold: increased from $600 to $2,000, indexed.
ERC promoters must meet new due diligence standards, $1,000 penalty per failure.
1% tax on remittance transfers abroad.
SSNs now required for education credits.
Firearms transfer tax reduced.
EITC program certification and certain privacy penalty hikes dropped.
🌱 Clean Energy Provisions
Many major incentives are phased out or eliminated:
Clean vehicle & alternative fuel credits terminated after Sept 30, 2025.
Home energy efficiency, clean hydrogen, sustainable aviation fuel, new wind/solar credits phased out by 2027–2029.
Nuclear credits restricted for foreign fuel.
Clean fuel production credit extended but with foreign feedstock bans.
✅ Bottom Line: How This Affects Your Tax Plan
🔑 Many popular cuts and deductions are now locked in — but some come with phaseouts and caps that need proactive planning.
🔑 Clean energy businesses, developers, and investors will see major impacts as credits wind down.
🔑 Estates, small businesses, and real estate investors should revisit their structures now, especially with the new basis step-up rules and QSBS expansion.
🔑 Multinational companies and high-income pass-through owners must pay attention to the international tweaks and new interest deduction rules.
📣 Take Action
This is one of the most comprehensive tax bills in decades. Don’t wait until 2026 to find out you’re misaligned.
✅ Review your entity structure
✅ Update estate and gift strategies
✅ Revisit R&D expenses and depreciation elections
✅ Model SALT deduction workarounds
✅ Check how international changes affect your operations
📩 Ready for a proactive review? Contact me to start planning now.