Key Tax Changes Under the One Big Beautiful Bill Act (OBBBA) of 2025

On July 4, the “One Big Beautiful Bill Act” (OBBBA) of 2025 was signed into law by the President. This sweeping legislation introduces significant tax changes that will affect both individual taxpayers and businesses of all sizes and income levels. We’ll be publishing a series of follow-up articles in the coming weeks to unpack the most impactful changes in greater detail, so stay tuned. In the meantime, below is a summary of the law’s key points.

Key Provisions for Individual Taxpayers
Standard Deduction
The near doubling of the standard deduction under the 2017 Tax Cuts and Jobs Act (TCJA) is made permanent, with an additional increase for 2025 (e.g., $15,750 for single filers, $31,500 for married filing jointly filers). These amounts will be indexed for inflation starting in 2026.

Personal Exemptions
The elimination of personal exemptions under the TCJA is made permanent.

SALT Deduction Cap
The cap on the state and local tax (SALT) deduction is temporarily increased to $40,000 (adjusted for inflation) through 2028, then reverts to $10,000 in 2029. The bill also preserves the SALT deduction for pass-through entity taxes and does not restrict existing workaround strategies used by many small business owners.

Charitable Deduction for Non-Itemizers
Beginning in 2026, the Act allows non-itemizers to claim a charitable deduction of up to $1,000 ($2,000 for a joint return) for cash contributions to a public charity.

Child Tax Credit
The $2,000 per-child credit from the TCJA is made permanent, with a temporary increase to $2,200 for tax year 2025. The credit will be indexed for inflation after 2025.

Senior Bonus Deduction
A new, temporary $6,000 deduction is available for individuals aged 65 and older for tax years 2025–2028, subject to income-based phaseouts.

Auto Loan Interest Deduction
Taxpayers can now deduct up to $10,000 in interest on loans for new vehicles assembled in the U.S. for tax years 2025–2028. Income limitations apply.

Deductions for Tips & Overtime Pay
A temporary deduction is introduced for up to $25,000 in qualified tip income and up to $12,500 in overtime pay, applicable from 2025–2028 and subject to income thresholds and other limitations.

Limitation on Wagering Losses
Starting in 2026, losses from wagering transactions are now limited to 90% of the amount of losses in the tax year, to the extent of the gains from such transactions during the year.

“Trump Accounts” for Children
New tax-advantaged savings accounts are established for children under 18, with a one-time $1,000 federal credit for qualifying children born between 2025 and 2028.

Estate & Gift Tax Exemption
The estate, gift, and generation-skipping transfer tax exemption is permanently increased to $15 million per individual, with inflation indexing starting in 2026.

Key Provisions for Businesses
Qualified Business Income (QBI) Deduction
The 20% deduction for owners of pass-through entities (e.g., partnerships, LLCs, S corps, and sole proprietorships) is made permanent and expanded.

Bonus Depreciation
Restores and permanently extends 100% bonus depreciation for qualified assets placed in service after January 19, 2025, allowing full expensing in the year of acquisition.

R&D Expensing (Section 174)
Immediate expensing of domestic R&D costs is restored and made permanent, retroactive to 2022 for eligible small businesses.

Section 179 Expensing
The annual expensing limit increases to $2.5 million, with the phase-out threshold raised to $4 million starting in 2025. Both amounts will be adjusted annually for inflation.

Business Interest Deduction
Beginning in 2025, the new law restores a more favorable calculation for the business interest deduction limit — based on EBITDA rather than EBIT.

Clean Energy Incentives
Several tax credits and incentives from the Inflation Reduction Act are either repealed or significantly reduced, signaling a shift in energy policy.

As you can see, the OBBBA introduces a wide range of important tax changes for both individuals and businesses—some beneficial, others complex and conditional. Many of these provisions include additional rules, limitations, and income phaseouts.

Weiss & Company LLP will continue to closely monitor developments related to this legislation. If you have questions about how the OBBBA may impact your tax situation—or any other tax matters—don’t hesitate to reach out to your Weiss tax advisor.