On July 4, 2025,, the One Big Beautiful Bill Act (OBBBA) became law. The Act itself was almost 1,000 pages. It made many of the provisions of the 2017 Tax Cuts and Jobs Act permanent and included new federal tax provisions.
The following is a summary of selected provisions of OBBBA. Please note that wherever a tax provision is made “permanent” it may be changed by future legislation. This is not intended to be an exhaustive summary of OBBBA, so if you have questions about what is touched on below or other provisions you have read about, please contact any one of our tax attorneys.
INDIVIDUAL TAXES
- The current tax rates and brackets are made permanent, with increased inflation adjustments for the lowest three tax brackets. There was no increase in the rates for high-income individuals.
- The standard deduction is made permanent, with an increase to $31,500 for married filing jointly (MFJ) taxpayers and $15,750 for single taxpayers, with inflation adjustments thereafter.
- Temporarily (2025-2028), there is a “senior deduction” of $6,000 for each taxpayer 65 or older, whether or not the senior itemizes deductions. This phases out for seniors with adjusted gross income (AGI) exceeding $75,000 ($150,000 for MFJ).
- The personal exemption is eliminated.
- OBBBA permanently suspends various miscellaneous itemized deductions, such as unreimbursed employee expenses, investment advisory fees, tax preparation fees and safe deposit rental fees.
- OBBBA makes permanent the $750,000 limit on principal residence debt for which interest is deductible.
- OBBBA increases for five years (2025-2029) the limit for state and local tax deductions to $40,000, subject to phase out for taxpayers with AGI of $500,000 or more (but to not less than $10,000). Beginning in 2030, the state and local tax deductions will again be limited to $10,000.
- The Section 199A Qualified Business Income deduction is made permanent, with changes that increase the phase-in range. There is a new minimum deduction for taxpayers with at least $1,000 of qualifying income, adjusted for inflation.
- Tip income in eligible industries (to be determined by the Treasury Department) up to $25,000 may be deducted for 2025-2028. These tips remain subject to employment taxes.
- Alternative Minimum Tax exemption amounts and phaseout thresholds are made permanent and indexed for inflation beginning in 2026.
- Section 1202 exclusion of gain for qualified small business stock is made permanent, and the requirements to qualify for this gain exclusion are modified in a manner favorable to qualifying stockholders.
- Non-itemizing taxpayers may deduct cash charitable contributions to qualified charitable organizations of up to $1,000 for a single-filers and $2,000 for MFJ taxpayers.
- A new threshold of 0.5% of AGI is imposed for itemized charitable deductions.
ESTATE AND GIFT TAXES
The lifetime gift tax and estate tax exemption permanently increases in 2026 to $15 million per person, which is inflation indexed annually.
BUSINESS TAXES
- Domestic research and experimental (R&E) expenses, including the development of software, paid or incurred in 2025 and thereafter are permanently allowed to be fully deducted immediately, or, if so elected, to be capitalized and amortized ratably over a period of at least five years. Also, businesses with gross receipts of $31 million or less may elect to apply this change for tax years beginning after December 31, 2021 (for calendar year taxpayers, 2022-2024). Also, for capitalized R&E expenses incurred after December 31, 2021, taxpayers may elect to accelerate the remaining deductions over a one or two-year period.
- Bonus Depreciation under Section 168(k) is permanently extended and increased to 100% for property that is both acquired and placed in service after January 19, 2025.
- The Section 179 expense limit is increased from $1 million to $2.5 million for property placed in service after December 31, 2024, subject to phase-out rules.
- OBBBA provides a 100% deduction for “qualified production property” costs. This includes costs for building or acquiring property used for manufacturing, production or refining with construction beginning after January 10, 2025 and before January 1, 2029, and that is placed in service by December 31, 2031. Qualified production property is property used in a “qualified production activity,” defined as the manufacturing, production or refining of a qualified product: which “results in a substantial transformation of the property comprising the project.”
- OBBBA provides for a permanent rolling 10-year designation for Opportunity Zones
The threshold in any calendar year for filing Form 1099 changes from payments of $600 to payments of $2,000.
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