The “One Big Beautiful Bill Act” was officially passed by Congress and signed into law by President Trump on July 4, 2025. This landmark legislation will be impactful on individual taxpayers, businesses, and families throughout the United States. As your trusted advisor, Anders aims to help you understand the key provisions and strategically prepare for the upcoming opportunities and challenges.
Tax Cuts and Jobs Act (TCJA) Meets One Big Beautiful Bill Act (OBBB)
The Bottom Line up Front
The new law incorporates most of the 2017 Tax Cuts and Jobs Act provisions as well as new tax breaks and spending cuts.
| Provision | Details | Duration | Who Benefits | Planning Considerations |
|---|---|---|---|---|
| SALT Deduction | Cap increases from $10,000 to $40,000 | 5 years (reverts to $10,000) | High-tax state residents earning <$500,000 *Subject to phase-out | Time major deductible expenses; consider state tax planning |
| Child Tax Credit | Permanently increases credit to $2,200 (adjusted for inflation) *Makes permanent the refundable portion of $1,400 adjusted for inflation – $1,700 in 2025 | Permanent | Families with children, income limits apply *Subject to phase-out | Review family tax planning and timing of major expenses |
| No Tax on Tips | Up to $25,000 above-the-line deduction for tip income | Through 2028 | Service industry workers *Subject to phase-out | Compensation planning; employer reporting requirements |
| No Tax on Overtime | Above-the-line Deduction for up to $12,500 ($25,000 joint) on overtime pay up to $150,000 ($300,000 joint) of income | Through 2028 | Hourly and salaried workers *Subject to phase-out | Consider overtime scheduling and compensation structure |
| Senior Deduction | Additional $6,000 standard deduction | 2025–2028 | Seniors with income <$75,000 (single)/<$150,000 (married) | Review retirement income timing and Roth conversions |
| Pass-Through Deduction | Makes the qualified business income (QBI) deduction permanent and keeps the rate at 20%. Expands the deduction limit phase-in range for SSTBs and other entities subject to the wage and investment limitation by increasing the $50,000 amount for non-joint returns to $75,000 and the $100,000 amount for joint returns to $150,000. | Permanent | Business owners, contractors, freelancers | Entity structure review; timing of business income |
| QSBS Expansion | Asset threshold $50M→$75M; exclusion $10M→$15M | Permanent | Small business investors and founders | Accelerate qualifying investments; review exit timing |
| Estate Tax | Exemption increases to $15M per person | Permanent | High-net-worth families | Update estate plans; consider gifting strategies |
| Auto Loan Interest | Up to $10,000 deduction for US-made vehicles | Through 2028 | Car buyers *Subject to phase-out | Time vehicle purchases; consider US-made options |
| EV Credits | Tax credits eliminated | Ends September 2025/June 2026 | EV buyers | Accelerate EV purchases before deadline |
| Capital Expenditures | 100% Bonus depreciation made permanent; Section 179 increased to $2.5 million; 100% first year deduction allowed for Qualified Production Property | Permanent for assets acquired and placed in service after January 19, 2025 QPP eligible through 2029 | All businesses | Review need and timing for capital expenditures prior to year-end |
| Research and Experimental Expenditures | 100% expensing for domestic R&D and equipment | Permanent Retroactive R&D expensing available to 2022 for taxpayers with average annual gross receipts of $31 million | All businesses | Accelerate capital investments and R&D spending |
| Business Interest Limitation | Reinstated EBITDA limitations | After December 31, 2024 | Leveraged businesses | Review debt structure for limitations under new rules |
| Medicaid Work Requirements | 80 hours/month for able-bodied adults <65 | Permanent | Low-income individuals and families | Review benefit eligibility; plan for potential changes |
| SNAP Changes | States pay 5% of benefits, 75% of admin costs | Starting 2028 | SNAP recipients | Monitor state policy changes; budget for potential benefit reductions |
Individual Tax Provisions: What Changes for You
Enhanced State and Local Tax (SALT) Deduction
For those earning below $500,000, the existing cap will increase from $10,000 to $40,000. The amount of the deduction available to a taxpayer phases down for taxpayers with modified adjusted gross income (MAGI) over $500,000 (in 2025). This alleviates a considerable amount of strain for taxpayers in high-tax states. Although, there is still a limit where certain owners of pass-through entities will qualify to sidestep the cap.
Planning Consideration: For taxpayers who live in high-tax states and are thinking about incurring strategic expenses, the timing of incurring these expenses is no longer critical due to the new cap.
No Tax on Tips and Overtime
Under the new regulations, up to $25,000 in income designated as tips and overtime pay for certain employees earning up to $150,000 ($300,000 in the case of a joint return) in 2025 will be deductible. These provisions will only remain in place until 2028.
Planning Consideration: Service industry employers and employees should factor these temporary benefits into compensation planning and budgeting decisions.
New Deduction: Automobile Loan Interest
There is a new provision that includes the $10,000 limit on deductible interest for automobile loans on vehicles purchased after 2024. This will be applicable until 2028 for both itemizers and non-itemizers, subject to a phase-out starting at $100,000 modified adjusted gross income for single filers and $200,000 for joint filers. Among other restrictions, applicable passenger vehicles must have had their final assembly in the United States.
New for Families: Trump Accounts for Newborns
With the aim of promoting family wealth-building, new tax-advantaged “Trump Accounts” will be initiated with $1,000 at birth and will allow for long-term tax-deferred growth similar to IRAs. Every account can take up to $5,000 in additional contributions per year, including up to $2,500 on a tax-free basis by a parent’s employer.
Enhanced Child Tax Credit
Eligible individuals will receive a permanently increased child tax credit of $2,200 per child. Single parents earning up to $200,000 and married couples up to $400,000 would be eligible.
Senior Tax Benefits
From 2025 to 2028, senior citizens will receive a $6,000 increase to their standard deduction which will phase out for those making over $75,000 individually, or $150,000 for couples.
Pease Limitation Replaced
The Pease Limitation was set to apply again in tax year 2026. The Act permanently repeals the Pease Limitation and instead generally applies a 2% reduction. Under the Act, itemized deductions will be reduced by 2/37 of the lesser of (a) the amount of the deductions or (b) the taxable income that exceeds the dollar amount at which the 37% bracket begins. The deduction for qualified business income will not be subject to this limitation.
Permanent Non-Itemizers’ Charitable Deduction for Individuals
Under the new regulations, non-itemizers may claim a charitable deduction of up to $1,000 ($2,000 for joint filers) for cash contributions made to qualifying public charities, starting in tax years after December 31, 2025. This below-the-line deduction is available without itemizing and is subject to requirements under Code Sec. 170(p).
Planning Consideration: Taxpayers who typically take the standard deduction should consider accelerating eligible charitable giving to take advantage of this new opportunity.
A New Floor for Deducting Charitable Contributions
A Corporation can claim a deduction for charitable contributions only if, and to the extent that, the aggregate of such contributions exceeds 1% for corporation’s taxable income. Total deductions for charitable contributions by the corporation continue to be limited to 10% of taxable income, with the excess (as well as the contributions disallowed by the 1% floor) carried forward up to five years. However, if aggregate corporate contributions do not exceed 10% of taxable income, there is no carryforward of contributions disallowed due to the 1% floor.
An individual can claim a deduction for charitable contributions only if, and to the extent that, the aggregate of such contributions exceeds 0.5% of the individual’s adjusted gross income (AGI). Total deductions for charitable contributions by an individual continue to be subject to the current limitations (which depend upon the type of contribution and recipient), with the excess (as well as the contributions disallowed by the 0.5% floor) carried forward up to five years. However, if the individual’s aggregate contributions do not result in carryover, there is no carryover of contributions disallowed due to the 0.5% floor.
For both the non-itemizer charitable contribution deduction as well as the 1% and .5% floors, the beginning date which these will go into effect is after December 31, 2025.
Business Tax Implications
Pass-Through Business Deduction Enhancement
Makes the qualified business income (QBI) deduction permanent and keeps the rate at 20%. Expands the deduction limit phase-in range for SSTBs and other entities subject to the wage and investment limitation by increasing the $50,000 amount for non-joint returns to $75,000 and the $100,000 amount for joint returns to $150,000. This improvement is generous to contractors, freelancers, partnerships, S corporations, and other pass-through entities.
Advisory Note: Business owners must evaluate their entity form over the long term to take full advantage of this increased deduction with strategic planning.
Additional Insight: Increased eligibility criteria along with expanded qualification have made limitations for many service-based businesses more favorable, allowing greater access than before.
Qualified Small Business Stock (QSBS) Expansion
The bill has updated the asset cap for qualifying as a “small business” from $50 million to $75 million and increased the capital gains exclusion from $10 million to $15 million. The exclusion continues to be capped at the greater of $15 million or 10 times the stockholder’s basis in the shares, enabling considerable tax benefits for investment in successful small businesses.
Capital Expenditures
Bonus depreciation: The bill permanently extends the Sec. 168 additional first year (bonus) depreciation deduction. The allowance is increased to 100% for property acquired and placed in service on or after Jan. 19, 2025, as well as for specified plants planted or grafted on or after Jan. 19, 2025.
Sec. 179 expensing: The bill increases the maximum amount a taxpayer may expense under Sec. 179 to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million.
Additional Insight: Businesses with heavy capital expenditures stand to benefit significantly as bonus depreciation has been restored to a permanent 100% for assets placed in service after January 19, 2025.
R&D Deduction Flexibility
All taxpayers can deduct domestic research or experimental expenditures paid or incurred after December 31, 2024 (conducted inside United States). For research conducted outside the United States, the amounts will continue to be required to be capitalized and amortized over 15 years. Small business taxpayers with average annual gross receipts of $31 million or less will be permitted to apply this change retroactively to tax years beginning after December 31, 2021. All other taxpayers that made domestic research or experimental expenditures after December 31, 2021, and before January 1, 2025, will be permitted to elect to accelerate the remaining deductions for those expenditures over a one- or two-year period.
Additional Insight: Startups and firms centered around innovation will benefit greatly from being able to choose between immediate deduction and amortization because of the added strategic flexibility.
Business Interest Limitation
The bill reinstates the EBITDA limitation under Sec. 163(j) for tax years beginning after Dec. 31, 2024. Therefore, for purposes of the Sec. 163(j) interest deduction limitation for these years, adjusted taxable income would be computed without regard to the deduction for depreciation, amortization, or depletion. The bill would also modify the definition of “motor vehicle” to allow interest on floor plan financing for certain trailers and campers to be deductible.
Estate Planning Considerations
The estate tax exemption increases to $15 million per individual ($30 million for married couples) and will now be permanently adjusted for inflation. These changes provide greater predictability for long-term planning, addressing the uncertainty that existed under prior law.
Planning Considerations: Individuals and families with meaningful estate planning needs should review their plans in light of the increased, inflation-adjusted exemption.
Opportunity Zones Permanently Renewed
The bill permanently extends Opportunity Zones, originally introduced under the 2017 TCJA. These zones offer tax deferral and potential exclusion on capital gains invested in designated low-income communities.
Who Benefits: Real estate investors, developers, and capital gains-focused planners now have increased certainty to use Opportunity Zones as a long-term tool for tax-advantaged investment and estate planning.
Additional Insight: The synergy between capital gains deferral and the expanded estate exemption creates new opportunities to optimize multi-generational wealth strategies.
International Tax Reforms
The renaming of the Global Intangible Low-Taxed Income (GILTI) provisions to “Net CFC Tested Income”. The bill reduces the deduction allowed under section 250 to 40%, does away with a deduction for the “net deemed tangible income return” (NDTIR), and increases the allowable FTC to 90%. Assuming a corporate tax rate of 21%, the new effective GILTI tax rate is then 13.86%. These shifts will impact corporate multinationals and companies with international branches.
Additional Insight: Previously scheduled rate drops under the TCJA have been reversed. For example, section 250 deduction now rises to 40% rather than dropping to 37.5%, However, the removal of the NDTIR deduction increases the overall effective tax rate. These changes may warrant structural review for international filers.
Strategic Planning Recommendations
Immediate Actions
- Review your entity structure to optimize the enhanced pass-through deduction
- Evaluate SALT planning strategies given the increased cap
- Consider accelerating QSBS investments if you qualify under the expanded criteria
- Plan for EV purchases before the September 2025 credit expiration
- Finalize clean-energy project construction start dates to preserve incentives
Medium-Term Considerations
- Estate planning updates to leverage increased exemptions
- Business investment timing to take advantage of enhanced depreciation benefits
- Compensation planning for businesses with tipped or overtime employees
- R&D-heavy businesses should evaluate election between deduction and amortization
Long-Term Strategy
- Monitor implementation of complex provisions, especially international tax reforms
- Prepare for potential changes when temporary provisions expire in 2028
- Consider the impact of spending cuts on your business or family circumstances
- Model scenarios with deficit-induced policy changes that could raise taxes or reduce benefits later
Looking Ahead
The “One Big Beautiful Bill” represents the most significant tax legislation since the 2017 Tax Cuts and Jobs Act. While it aims at providing robust tax relief for many Americans and businesses, it also introduces complexity and creates future fiscal challenges. The temporary nature of several key provisions means that tax planning will require ongoing attention and adjustment.
At Anders, we understand how challenging tax changes can be for clients, which is why on our end, we are analyzing their intricacies and their consequences for all our clients across all industries. We are committed to helping you navigate these changes effectively. We recommend scheduling a consultation to discuss how these changes specifically impact your situation and to develop strategies that optimize your tax position while supporting your long-term financial goals.
The need for detailed and cohesive strategies persists, especially given the laws cover everything from an individual’s taxes, company write-offs, estate planning, and even foreign trade. As we await the text and further details, we will keep distributing tailored updates that help our clients capitalize on opportunities while minimizing risk.
Contact your Anders advisor to discuss how the “One Big Beautiful Bill” affects your specific circumstances and to develop an initiative-taking strategy for the changes ahead.
This analysis is based on information available as of July 8, 2025. Tax laws are complex and subject to change. Please consult with your Anders advisor for personalized guidance based on your specific situation.
