The One Big Beautiful Bill Act (OBBBA) was passed and signed into law on July 4, 2025. This is an extremely large and complicated law which combines a number of Trump administration priorities into one piece of legislation. While we do not intend to cover every aspect or line item of this legislation, we are providing a summary of a few key aspects of the legislation for our clients as it relates to taxes, investments and the wider economy.
Our focus here will be the individual and business tax provisions included in the legislation. We’ve compiled this summary utilizing an analysis put together by Holland & Knight, LLP as well as data pulled directly from the IRS. Please see a summary of the OBBBA below relating to taxes.
Individual Tax Provisions
- Makesexisting rates and brackets (originally passed in the TCJA of 2017) permanent (were previously set to expire and increase after 12/31/2025)
- Increases the standard deduction by $750 ($1500 for married filing joint) and makes the higher amounts permanent (and subject to inflation adjustments)
- Increases the SALT limit to $40,000 for the next 5 years (implements income limit where SALT deduction phases down after $500,000 income, where the lower $10,000 limit will apply)
- Tips deduction – temporary above-the-line deduction for tip income (up to $25,000); phases down based on income
- Overtime deduction – temporary above-the-line deduction for overtime pay (up to $12,500); phases down based on income
- Car Loan Interest deduction – temporary deduction (up to $10,000) for car loan interest associated with new vehicles with final assembly in the US; phases down based on income
- Increases Child Tax Credit by $200 and makes higher Child Tax Credit permanent; also implements stricter controls such as requirement for Social Security numbers
- Social Security Senior Deduction – a new deduction (up to $6,000 per individual, or $12,000 for married filing joint) to help offset social security taxes; phases out as income rises, and currently only available for tax years 2025 through 2028
- Section 199A Business Income Deduction for Pass-Throughs made permanent at 20%
- Limits itemized deduction for top bracket to 35% (versus top bracket of 37%)
- ACA health insurance exchanges – allows expiration of enhanced premium credit at end of 2025 and increases eligibility verification requirements
- Green Retrofit Program – rescinds all unobligated funds from this IRA program
Business Tax Provisions
- Section 168 Bonus Depreciation made permanent at 100%; additional first-year depreciation deduction available for manufacturing, production, and refining property
- Section 174 Research and Development deduction permanently restored for expenses paid or incurred after 12/31/24, but only if domestic. Small businesses (revenue less than or equal to $30 million) can apply retroactively to 12/31/21, and others can accelerate remaining deductions
- Section 163(j) Business Interest Expense limitation reinstated after 12/31/24
- Section 48D Advanced Manufacturing Investment Credit is enhanced to 35% from the current 25% for property placed in service after 12/31/25. Termination date of credit remains 12/31/26 and eligibility did not change
- Expands Low-Income Housing Tax Credit – permanently increases the state allocation ceiling by 12% and lowers the bond-financing threshold to 25% for projects financed by bonds beginning 2026
- Opportunity Zones (OZs) Permanent Renewal and Enhancement – Permanency and new rules for opportunity zones:
- Creates second round of OZs for census tracts that have poverty rate of at least 20% or a median family income that does not exceed 70% of the area median income
- Excludes census tract where median family income is 125% or greater of the area median family income
- Requires 33% of designated OZs be comprised entirely of rural area; in the case there are fewer than 33%, all eligible rural areas must be designated
- Add reporting requirements for participants
- Increases the basis step up to 30% for rural areas (10% for non-rural) if investment held at least 5 years
- Endowment Tax for Private Colleges and Universities – limited to educational institutions with at least 3,000 full-time students (increased from 500) in preceding tax year and retains the student-adjusted endowment (full-time students/endowment) floor of $500,000; Also implements tax schedule based on the student-adjusted endowment (up to 8%)
- NHTSA CAFE civil monetary penalties set to zero. Effectively removes penalty for automobile companies to meet fuel efficiency requirements.