Your Complete Guide to the One Big Beautiful Bill Act: 2025 Tax Law Changes from Business Deductions to Family Credits

The “One Big Beautiful Bill Act” of 2025 represents the most comprehensive tax overhaul in recent years, with more than 35 major provisions affecting everything from individual tax rates to business deductions. Below, you’ll find every significant change—numbered, explained in depth, and organized by impact—so you can understand exactly what’s changing, when it takes effect, and what it means for your business, your family, and your financial planning. With some critical deadlines approaching as early as September 2025, understanding these changes now is essential for making informed decisions.

1. Individual Tax Rates

Current Law:

• Top individual tax rate is 37%, set to expire after 2025 and revert to higher pre-2017 rates (top individual tax rate was 39.6%).

New Law:

• 37% top rate and all current brackets are made permanent.

What It Means:
If you weren’t following the potential rate changes, you won’t see any difference—your tax rates will simply continue as they have for the past several years. The main change is that these rates are now permanent, rather than set to expire. This eliminates the risk of a post-2025 tax hike. Individuals—including small business owners who report business income on their personal returns—can plan with confidence, knowing their marginal rates won’t increase. This stability is especially valuable for long-term business, investment, and financial planning.

2. Standard Deduction

Current Law:

• $15,000 (single)
• $30,000 (joint)
• $22,500 (head of household)
• Indexed for inflation

New Law:

• $15,750 (single)
• $31,500 (joint)
• $23,625 (head of household)
• Indexed for inflation

What It Means:
A higher standard deduction means more income is shielded from tax, reducing taxable income for most filers. This change especially benefits those who don’t itemize, simplifying tax preparation and potentially lowering tax bills for millions.

3. Personal Exemption

Current Law:

• Suspended at $0 by TCJA through 2025.

New Law:

• Permanently eliminated.

What It Means:
There is no longer a per-person deduction for taxpayers or dependents. While the higher standard deduction offsets this for many, larger families may see less benefit compared to pre-2018 rules.

4. Child Tax Credit

Current Law:

• $2,000 per child
• $1,600 refundable
• Phases out at $200,000 (single) / $400,000 (joint)
• Inflation-adjusted

New Law:

• $2,200 per child
• $1,600 refundable
• Same phaseouts and inflation adjustment

What It Means:
Families receive a modest increase in the credit, but the refundable portion and phaseouts remain unchanged. This means most middle- and upper-income families benefit, but many low-income families will not see the full increase.

5. SALT Deduction Cap

Current Law:

• $10,000 cap on state and local tax (SALT) deduction through 2025.

New Law:

• $40,000 cap for 2025–2029 (indexed 1%/year)
• For married filing separately, the cap is $20,000.
• Reverts to $10,000 in 2030
• Phases out above $500,000 AGI for both single and married filers (example calculation below)
• The SALT cap is reduced by 30% of the amount by which your MAGI exceeds the threshold.
• The deduction cannot be reduced below the old $10,000 cap (or $5,000 for married filing separately).

Example of Phaseout calculation (2025, Married Filing Jointly)

• MAGI: $550,000
• Threshold: $500,000
• Excess: $550,000 – $500,000 = $50,000
• Phase-Out Amount: $50,000 × 30% = $15,000
• Adjusted Cap: $40,000 – $15,000 = $25,000
• So, this couple could deduct up to $25,000 in state and local taxes.

What It Means:
Taxpayers in high-tax states get significant, though temporary, relief. However, high-income filers see limited benefit due to the phaseout. After 2029, the cap returns to $10,000, so planning for future years is essential.

6. Section 199A (QBI) Deduction

Summary: What’s New and What’s Not

The 2025 tax law makes the 199A QBI deduction permanent, but it did not change the QBI deduction percentage (which remains 20%), did not alter the rules for Specified Service Trades or Businesses (SSTBs), and did not change the basic calculation method for the deduction. The only substantive change is that, starting in 2026, the phase-in ranges for the income thresholds are expanded, allowing higher-income taxpayers to phase out their deduction more gradually over a larger range.

QBI Deduction: Current Law vs. New Law

Key Features That Did Not Change

• Deduction Percentage: Remains at 20% of Qualified Business Income.
• Eligible Businesses: Applies to U.S. pass-throughs (sole proprietorships, partnerships, S corporations, some trusts/estates), not C corporations.
• Wage/Property Limitation: For taxpayers above the income threshold, the deduction is limited to the greater of:
  • 50% of W-2 wages paid, or
  • 25% of W-2 wages plus 2.5% of the unadjusted basis of qualified property.
• SSTB Limitation:
  • For Specified Service Trades or Businesses (law, health, consulting, financial services, etc.), the deduction phases out and is eliminated at the top of the phase-in range for high-income taxpayers.
• Calculation Method:
  • The deduction is computed in the same way as before, including all limitations and aggregation rules.

The Only Change: Expanded Phase-In Ranges (Starting 2026)

• Old Law (2024–2025):
  • Single: $50,000 phase-in range
  • Married Filing Jointly: $100,000 phase-in range
• New Law (2026+):
  • Single: $75,000 phase-in range
  • Married Filing Jointly: $150,000 phase-in range

This means the deduction now phases out more gradually for higher-income taxpayers, allowing a partial deduction over a broader income span.

Exact Phase-In Ranges by Year

Year	Filing Status	Phase-In Start	Phase-In End	Phase-In Range Width	Law in Effect
2024	Single	$191,950	$241,950	$50,000	Old Law (TCJA)
2024	Married Filing Joint	$383,900	$483,900	$100,000	Old Law (TCJA)
2025	Single	$197,300	$247,300	$50,000	Old Law (TCJA)
2025	Married Filing Joint	$394,600	$494,600	$100,000	Old Law (TCJA)
2026	Single	$197,300	$272,300	$75,000	New Law (OBBB)
2026	Married Filing Joint	$394,600	$544,600	$150,000	New Law (OBBB)

Minimum Deduction for Small Businesses

• New Law (2026+):
  • If you have at least $1,000 of active QBI, your deduction is the greater of the calculated amount or $400 (indexed for inflation).
  • This ensures even very small business owners receive a baseline deduction.

What This Means for Taxpayers

• No change to the deduction percentage (still 20%).
• No change to the treatment of SSTBs: high-income owners of SSTBs still lose the deduction above the top of the phase-in range.
• No change to the core calculation or eligibility rules.
• The only change:
  • The phase-in range is now wider, so the deduction phases out more gradually.
  • This benefits higher-income business owners, who will retain a partial deduction over a larger income span.
  • Small businesses with at least $1,000 in active QBI are guaranteed at least a $400 deduction.

In summary:
The QBI deduction remains a 20% deduction for pass-through business income, with all previous rules for SSTBs and calculation methods intact. The only substantive change is a wider phase-in range starting in 2026, making the deduction more accessible to higher-income business owners and providing a guaranteed minimum deduction for small businesses.

7. Section 179 Expensing

Current Law:

• $1.25M limit, $3.13M phaseout, indexed

New Law:

• $2.5M limit, $4M phaseout, both indexed

What It Means:
Small businesses can immediately deduct more of their equipment and property purchases, improving cash flow and making it easier to invest in growth and modernization. This applies to property placed in service in taxable years beginning after December 31, 2024.

8. Immediate Expensing and Bonus Depreciation

Current Law:

• Bonus depreciation was phasing down from 100%; in 2025, the rate was 40%.

New Law:

• 100% immediate expensing for equipment and research remains
• Qualified production property (aircraft, manufacturing real estate) now eligible for 100% bonus depreciation through 2030/31

What It Means:
Businesses can now immediately deduct 100% of the costs for equipment, domestic research and development expenses, and certain manufacturing real estate investments. This marks a significant expansion beyond previous law – not only is equipment expensing made permanent at 100%, but domestic R&D now qualifies for immediate expensing, reversing the recent requirement to amortize. Additionally, manufacturing real estate now qualifies for immediate expensing for the first time. This offers substantial cash flow benefits and strongly encourages domestic investment in manufacturing, technology development, and equipment modernization, helping to reduce taxable income and promote capital investment. Applies to property acquired after January 19, 2025.

9. Business Interest Deduction

Current Law:

• Interest deduction limited based on EBIT (earnings before interest and taxes).

New Law:

• For 2025–2029, limitation based on EBITDA (adds back depreciation/amortization), allowing more interest to be deducted
• Floor plan financing expanded to include more vehicle types
• Start Date: Taxable years beginning after December 31, 2024
• End Date: 2029 (EBITDA add‐back expires; returns to EBIT base in 2030)

What It Means:
Capital-intensive businesses can deduct more interest, making it easier to finance growth and equipment purchases. This is especially helpful for manufacturers, dealerships, and other asset-heavy industries.

10. Employer Child Care Credit

Current Law:

• 25% credit up to $150,000
• Limited to employer-provided child care facilities and services

New Law:

• 40% credit up to $500,000
• 50% credit up to $600,000 for eligible small businesses (must meet gross receipts test of Section 448(c) with modifications (using 5-year period instead of 3-year)
• Expanded to third-party intermediaries and jointly owned/operated facilities
• Credit amounts indexed for inflation after 2026

What It Means:
This represents a major expansion of the employer child care credit, effective for amounts paid after December 31, 2025. The credit rate increases significantly (from 25% to 40-50%), the maximum credit more than triples (from $150,000 to $500,000-$600,000), and eligibility is broadened to include arrangements with third parties and joint operations. Small businesses get even more generous treatment with higher rates and limits. This creates a stronger incentive for employers to provide or subsidize childcare, helping to attract and retain employees while supporting working families. The expansion to third-party arrangements makes it easier for smaller employers to participate by contracting with existing child care providers rather than operating their own facilities.

11. Dependent Care FSA Limit Increase: Current Law, New Law, and What It Means

Current Law

• The Dependent Care Flexible Spending Account (FSA) contribution limit is $5,000 per household per year ($2,500 if married filing separately).
• This limit has been unchanged since 1986 and is not indexed for inflation.
• Eligible expenses include daycare, preschool, before- and after-school care, and summer day camps for children under age 13, as well as care for certain disabled dependents.

New Law

• For plan years beginning on or after January 1, 2026, the Dependent Care FSA contribution limit increases to $7,500 per household per year ($3,750 if married filing separately).
• The new $7,500 limit is not indexed for inflation—it will remain at this level unless changed by future legislation.
• All other eligibility rules and definitions of qualifying expenses remain unchanged.

What It Means

This increase allows working families to set aside a significantly larger amount of pre-tax dollars to pay for eligible dependent care expenses, reducing their taxable income and overall tax bill. The higher limit helps families better manage the rising costs of child care, which have long outpaced the previous $5,000 cap. The change takes effect for plan years starting in 2026, so families should plan ahead and review their employer FSA plan options during open enrollment for that year to maximize this new benefit. However, because the new limit is not indexed for inflation, its real value will gradually decrease over time unless Congress acts again to adjust it. All other rules regarding eligible expenses and participant eligibility remain unchanged.

12. Tip Income Deduction

Current Law:

• No special deduction for tips.

New Law:

• Up to $25,000 of qualified tip income is deductible.
• Must be “cash or cash-equivalent (credit card) tips” from occupations that customarily received tips on or before December 31, 2024.
• Excludes tips that are not voluntary, are subject to negotiation, or are from specified service trades or businesses.
• Phaseout: Reduced by $100 for each $1,000 of modified AGI over $150,000 (single) / $300,000 (joint).

Start Date/Period:

• December 31, 2024 (taxable years beginning after this date)

End Date:

• December 31, 2028 (no deduction allowed for taxable years beginning after this date)

Phaseouts/Calculations/Notes:

• Both deductions require a Social Security number and joint filing for married couples.
• Modified AGI includes regular AGI plus excluded foreign income.
• Tips are excluded from qualified business income calculations.
• Both are above-the-line deductions (available to non-itemizers).

What It Means:
Service industry workers and hourly employees get direct tax relief through this temporary deduction, effective for tax years 2025–2028. The tip deduction applies to traditional tipped occupations (restaurants, salons, etc.) but excludes high-end service businesses. The deduction phases out for higher-income earners, ensuring that the benefit primarily goes to lower- and middle-income workers. The temporary nature (ending after 2028) means this is a short-term relief measure rather than a permanent tax policy change.

13. Overtime Pay Deduction

Current Law:

• No special deduction for overtime pay.

New Law:

• Up to $12,500 ($25,000 joint) of qualified overtime compensation is deductible.
• Must be overtime compensation required under the Fair Labor Standards Act.
• Phaseout: Same as tip deduction—reduced by $100 for each $1,000 of modified AGI over $150,000 (single) / $300,000 (joint).

Start Date/Period:

• December 31, 2024 (taxable years beginning after this date)

End Date:

• December 31, 2028 (no deduction allowed for taxable years beginning after this date)

Phaseouts/Calculations/Notes:

• Both deductions require a Social Security number and joint filing for married couples.
• Modified AGI includes regular AGI plus excluded foreign income.
• Tips are excluded from qualified business income calculations.
• Both are above-the-line deductions (available to non-itemizers).

What It Means:
The overtime deduction provides relief for workers required to work extra hours under federal labor standards, effective for tax years 2025–2028. The deduction phases out for higher-income earners, ensuring that the benefit primarily goes to lower- and middle-income workers. The temporary nature (ending after 2028) means this is a short-term relief measure rather than a permanent tax policy change.

14. Auto Loan Interest Deduction

Current Law:

• No deduction for auto loan interest

New Law:

Qualified Passenger Vehicle Loan Interest Deduction (Section 70203):

• Up to $10,000 per year deduction for interest on qualifying auto loans
• Vehicle must be U.S.-assembled (final assembly occurred within the United States)
• Must be original use to the taxpayer (not used vehicles)
• Loan must be secured by first lien on the vehicle for personal use
• VIN required on tax return

Qualifying Vehicles (Applicable Passenger Vehicle):

• Cars, minivans, vans, SUVs, pickup trucks, or motorcycles
• At least 2 wheels
• Manufactured primarily for public streets/roads/highways (not rail)
• Gross vehicle weight rating less than 14,000 pounds
• Treated as motor vehicle under Clean Air Act Title II
• Final assembly must occur within the United States
• Original use must commence with the taxpayer

Qualifying Loans:

• Purchase loans only (not leases)
• Secured by first lien on the vehicle
• For personal use (not commercial fleet sales)
• Incurred after December 31, 2024
• Excludes:
  • Fleet sales financing
  • Commercial vehicle loans (non-personal use)
  • Lease financing
  • Salvage title vehicle loans
  • Scrap/parts vehicle loans
  • Loans from related parties (family/business relationships)

Start Date/Period: January 1, 2025 (taxable years beginning after December 31, 2024)

End Date: December 31, 2028 (taxable years beginning before January 1, 2029)

Phaseouts/Calculations/Notes:

• $10,000 annual limit per taxpayer
• Phaseout: Deduction reduced by $200 for each $1,000 of modified AGI over:
  • $100,000 (single filers)
  • $200,000 (married filing jointly)
• Modified AGI includes regular AGI plus excluded foreign income (sections 911, 931, 933)
• Refinancing eligible but only up to the original loan amount
• VIN reporting required on tax return

What It Means:

This provision creates a temporary (2025-2028) tax deduction for interest paid on loans to purchase new, U.S.-assembled vehicles for personal use. The deduction is specifically designed to encourage domestic auto manufacturing and make vehicle purchases more affordable for moderate-income families. Key restrictions include that the vehicle must be U.S.-assembled, purchased new by the taxpayer, and financed with a secured purchase loan (not a lease). Commercial uses, fleet sales, and salvage vehicles are excluded. The phaseout ensures higher-income taxpayers receive reduced or no benefit, targeting relief to middle-class families. The requirement for first-lien secured financing and VIN reporting helps prevent abuse while ensuring the benefit goes to legitimate vehicle purchasers.

15. Charitable Deduction Provisions

The bill contains three separate charitable deduction changes, not just one:

#15A: Above-the-Line Charitable Deduction (Section 70424)

Current Law:

• $300 ($600 joint) above-the-line deduction (expired after 2021)

New Law:

• $1,000 ($2,000 joint) above-the-line deduction for individuals who do not itemize
• Made permanent

Start Date: Taxable years beginning after December 31, 2025

#15B: 0.5% Floor on Individual Charitable Deductions (Section 70425)

Current Law:

• No floor on charitable deductions for individuals

New Law:

• 0.5% floor on charitable contributions for individuals
• Aggregate charitable contributions must exceed 0.5% of taxpayer’s contribution base to be deductible

Start Date: Taxable years beginning after December 31, 2025

#15C: 1% Floor on Corporate Charitable Deductions (Section 70426)

Current Law:

• 10% ceiling on corporate charitable contributions, no floor

New Law:

• 1% floor on corporate charitable contributions (in addition to existing 10% ceiling)
• Modifies carryforward rules for corporations

Start Date: Taxable years beginning after December 31, 2025

What It Means:

The above-the-line deduction (#15A) creates a $1,000 ($2,000 joint) deduction for non-itemizers, encouraging charitable giving across all income levels. However, the bill also adds new floors (#15B and #15C) that require individuals to give at least 0.5% of their contribution base and corporations to give at least 1% of their taxable income before any charitable deductions are allowed. This creates a trade-off: easier deductibility for non-itemizers, but higher thresholds for itemizers and corporations to qualify for any charitable deduction at all.

16. Alternative Minimum Tax (AMT)

Current Law:

• AMT exemption amounts and phaseout thresholds set to expire after 2025
• 2025 exemption: $137,000 (joint), $88,100 (single)
• Phaseout threshold: $1,252,700 (joint), $626,350 (single)

New Law:

• AMT exemption amounts made permanent at increased levels
• Phaseout thresholds reverted to 2018 levels: $1,000,000 (joint), $500,000 (single), indexed for inflation

Start Date: Taxable years beginning after December 31, 2025

Who is Affected: Individuals, especially higher-income taxpayers

What It Means:
The AMT exemption remains at higher levels permanently, but the phaseout thresholds are actually lowered to 2018 levels. This means fewer middle-income taxpayers will be subject to AMT, but the phaseout begins at lower income levels than under current law, creating a middle ground between the old and new systems.

17. Third-Party Reporting Threshold

Current Law:

• $600 threshold for third-party settlement organizations (like Venmo, PayPal)
• 200+ transaction requirement removed in 2021

New Law:

• Threshold returns to $20,000 and 200+ transactions (pre-2021 levels)
• Backup withholding threshold also reverts to align

Start Date: Retroactive to calendar years beginning after December 31, 2021

Who is Affected: Gig workers, online sellers, small businesses

What It Means:
This significantly reduces the paperwork burden for casual sellers and gig workers. Most people selling items occasionally on platforms like eBay, Venmo, or PayPal will no longer receive 1099-K forms unless they have substantial activity ($20,000+ and 200+ transactions).

18. 1099 Information Reporting Threshold

Current Law:

• $600 threshold for 1099-NEC and 1099-MISC reporting

New Law:

• Threshold increased to $2,000, indexed for inflation starting 2027

Start Date: Payments made after December 31, 2025

Who is Affected: Small businesses, independent contractors

What It Means:
Businesses won’t need to issue 1099s to contractors unless they pay them $2,000 or more annually. This reduces administrative burden for small businesses while still capturing substantial contractor relationships.

19. Itemized Deduction Limitation

Current Law:

• Pease limitation set to return after 2025
• Top bracket taxpayers get full 37¢ per dollar of itemized deductions

New Law:

• Pease limitation has been permanently repealed
• New limitation caps tax benefit at 35¢ per dollar for top bracket taxpayers

Start Date: Taxable years beginning after December 31, 2025

Who is Affected: High-income individuals who itemize

What It Means:
High-income taxpayers see a reduced benefit from itemized deductions. Instead of getting 37¢ in tax savings per dollar of deductions, they get only 35¢, effectively increasing their tax burden while maintaining the ability to deduct expenses.

20. Green Energy Tax Credits

Current Law:

• EV and residential energy credits scheduled through 2032-2034
• Clean electricity credits through 2032
• Various manufacturing and production credits with extended timelines

New Law:

• Most credits repealed or phased out by 2025-2028
• Dramatic acceleration of termination dates
• Limited grandfathering for vehicles under binding contracts

Start Date/Period: Various dates from September 30, 2025 through December 31, 2028

End Date: Most credits terminate by December 31, 2025; some by 2027-2028

Phaseouts/Calculations/Notes:

IMMEDIATE ACTION REQUIRED (September 30, 2025):

• New EV Credit (Section 30D): $7,500 credit ENDS September 30, 2025
• Used EV Credit (Section 25E): $4,000 credit ENDS September 30, 2025
• Commercial Clean Vehicle Credit (Section 45W): $7,500 credit ENDS September 30, 2025

YEAR-END DEADLINE (December 31, 2025):

• Residential Clean Energy Credit (Section 25D): 30% credit for solar panels, battery storage ENDS December 31, 2025
• Energy Efficient Home Improvement Credit (Section 25C): Credit for HVAC, water heaters, windows ENDS December 31, 2025

MID-2026 DEADLINES:

• Alternative Fuel Vehicle Refueling Property Credit (Section 30C): EV charging stations END June 30, 2026
• New Energy Efficient Home Credit (Section 45L): For builders ENDS June 30, 2026
• Energy-Efficient Commercial Buildings Deduction (Section 179D): ENDS June 30, 2026

LATER TERMINATIONS (2027-2028):

• Clean Electricity Production Credit (Section 45Y): Solar and wind facilities must be placed in service by December 31, 2027 (with 12-month construction grace period)
• Clean Electricity Investment Credit (Section 48E): Solar and wind facilities must be placed in service by December 31, 2027 (with 12-month construction grace period)
• Clean Hydrogen Production Tax Credit (Section 45V): ENDS January 1, 2028
• Advanced Manufacturing Production Credit (Section 45X): Wind components END December 31, 2027

Who is Affected:

EV buyers, homeowners, renewable energy businesses, manufacturers

What It Means:

This represents a massive rollback of green energy incentives with extremely aggressive timelines. EV buyers have only until September 30, 2025 (only weeks from today) to take delivery of vehicles to qualify for the $7,500 credit. Homeowners considering solar have until December 31, 2025 to complete installations for the 30% credit. The dramatic acceleration means clients must act immediately to secure these significant tax benefits before they expire. Industry experts predict a surge in EV sales over the next three months followed by a sharp decline, while the solar industry faces massive disruption with only months to complete projects. The early termination of these credits, originally scheduled through 2032, represents one of the most aggressive reversals of clean energy policy in U.S. history, potentially slowing the transition to renewable energy and electric transportation.

Critical Client Advisory: Those considering EV purchases must finalize deals and ensure delivery by September 30, 2025. Solar customers should accelerate installation timelines to complete by year-end 2025. Business charging station installations must be completed by June 30, 2026.

21. Social Security Taxation

Current Law:

• Social Security benefits taxable based on income thresholds
• Additional standard deduction: $1,600 per person 65+

New Law:

• No change to Social Security taxation rules (due to reconciliation constraints)
• NEW: Additional $6,000 deduction for taxpayers 65+ (2025-2028)
• Phases out above $75,000 (single)/$150,000 (joint)

Start Date: Taxable years 2025-2028

Who is Affected: Seniors 65 and older

Phaseout Thresholds

• Single filers: Deduction begins to phase out at $75,000 of income and is fully phased out at $175,000.
• Married filing jointly: Deduction begins to phase out at $150,000 and is fully phased out at $250,000.
• The deduction is reduced proportionally as income rises above the threshold, disappearing entirely at the upper limit.

Phaseout Calculation

• The deduction is reduced by 6% of the amount by which your income exceeds the threshold.
• For single filers:
  • If your income is $85,000, the deduction is reduced by 6% of $10,000 ($600).
  • If your income is $175,000 or more, the deduction is fully phased out ($6,000 – 6% × $100,000 = $0).
• For married filing jointly:
  • If your income is $170,000, the deduction is reduced by 6% of $20,000 ($1,200).
  • If your income is $250,000 or more, the deduction is fully phased out ($12,000 – 6% × $100,000 = $0).

Formula

• Single: Threshold = $75,000, Max Deduction = $6,000, Fully phased out at $175,000.
• Joint: Threshold = $150,000, Max Deduction = $12,000, Fully phased out at $250,000.

Example Calculations

Filing Status	Income	Deduction Allowed
Single	$80,000	$6,000 – 6% × $5,000 = $5,700
Single	$100,000	$6,000 – 6% × $25,000 = $4,500
Single	$175,000	$6,000 – 6% × $100,000 = $0
Joint	$160,000	$12,000 – 6% × $10,000 = $11,400
Joint	$200,000	$12,000 – 6% × $50,000 = $9,000
Joint	$250,000	$12,000 – 6% × $100,000 = $0

What It Means:
While Social Security taxation wasn’t directly changed, the new $6,000 senior deduction effectively eliminates federal tax liability for most seniors. Combined with the regular senior deduction and standard deduction, approximately 88% of seniors will have zero federal tax on Social Security benefits.

22. Qualified Small Business Stock (QSBS)

Current Law:

• 5-year holding period: 100% exclusion up to $10 million
• No tiered structure

New Law:

• Tiered exclusion: 3-year (50%), 4-year (75%), 5-year (100%)
• Non-excluded portion taxed at 28% (higher than 20% capital gains rate)
• Exclusion cap increased to $15 million, indexed for inflation

Start Date: Stock acquired after enactment

Who is Affected: Startup investors, small business owners

What It Means:
Investors can benefit from partial exclusions sooner but face higher tax rates on non-excluded gains. The higher cap benefits larger investments, while the tiered structure provides more flexibility for shorter holding periods.

23. Excess Business Loss Limitation

Current Law:

• Limitation scheduled to expire in 2028
• $313,000 (single)/$626,000 (joint) limits for 2025

New Law:

• Limitation made permanent
• Same dollar limits, indexed for inflation
• Excess losses become NOL carryforwards

Start Date: Taxable years beginning after December 31, 2024

Who is Affected: Business owners with large losses

What It Means:
Prevents wealthy individuals from using large business losses to completely offset other income in a single year. Losses above the threshold can still be used but are spread over multiple years as NOL carryforwards.

24. Gambling Loss Limitation

Current Law:

• Gambling losses deductible up to full amount of winnings

New Law:

• Gambling losses limited to 90% of winnings

Start Date: Taxable years beginning after December 31, 2024

Who is Affected: Gamblers who itemize deductions

What It Means:
Even if gambling losses equal or exceed winnings, taxpayers must pay tax on at least 10% of their winnings. This increases tax revenue from gambling activities and reduces the ability to completely offset winnings with losses.

25. Health Savings Account (HSA) Changes

Current Law:

• 2025 limits: $4,150 (individual), $8,300 (family)
• Limited eligibility requirements

New Law:

• Contribution limits increase by $4,300 (individual), $8,550 (family)
• Eligibility expanded to Medicare Part A enrollees
• New qualified expenses: Direct Primary Care, gym memberships, telehealth
• Phases out above $75,000 (single)/$150,000 (joint)

Start Date: Taxable years beginning after December 31, 2025

Who is Affected: Individuals and businesses offering health benefits

What It Means:
HSAs become significantly more powerful for tax-advantaged savings. The doubled contribution limits and expanded eligible expenses make HSAs attractive for a broader range of healthcare and wellness costs.

26. Trump Accounts (Children’s Savings)

Current Law:

• No federal seed accounts exist

New Law:

• $1,000 federal deposit for children born 2025-2028
• $5,000 annual contribution limit
• Tax-favored growth until age 18
• Established as an individual retirement account (IRA, not a Roth)
• Qualified uses: education, first home, small business startup

Start Date: Children born between January 1, 2025, and January 1, 2029

Who is Affected: Families with children born during eligible period

What It Means:
Creates a new federally-funded savings program encouraging long-term investment for children’s future. The accounts combine government seed money with private contributions to build wealth over time for education, homeownership, or entrepreneurship.

27. Estate & Gift Tax Exemption

Current Law:

• $13.61 million per person (2024), indexed for inflation
• Set to revert to lower levels in 2026

New Law:

• Exemption increased to $15 million per person, indexed
• $30 million for married couples
• Made permanent

Start Date: Estates and gifts after enactment

Who is Affected: High-net-worth individuals and family businesses

What It Means:
Wealthy families can transfer more assets tax-free, making estate planning more generous and flexible. This particularly benefits family-owned businesses and multi-generational wealth transfer strategies.

28. Qualified Opportunity Zones (QOZ)

Current Law:

• Program set to expire in 2026
• Deferred gain recognition deadline: 2026

New Law:

• Program made permanent
• Deferred gain recognition extended to 2028
• Enhanced reporting requirements
• Rural opportunity zones added

Start Date: New investments after enactment

Who is Affected: Real estate investors, businesses in designated areas

What It Means:
Continues tax incentives for investing in economically disadvantaged communities. The permanent extension provides certainty for long-term development projects, while enhanced reporting ensures proper use of incentives.

29. Low-Income Housing Tax Credit (LIHTC)

Current Law:

• Current state allocation ceilings and financing thresholds

New Law:

• State allocation ceilings increased
• Financing thresholds lowered
• Enhanced credit percentages for certain projects

Start Date: Allocations after enactment

Who is Affected: Affordable housing developers and investors

What It Means:
More resources are available for affordable housing development. Lower thresholds make it easier for projects to qualify, while higher allocations enable states to support more developments.

30. ACA Premium Tax Credit Recapture

Current Law:

• Cap exists on recapture of excess advance premium tax credits

New Law:

• Cap on recapture eliminated

Start Date: Taxable years beginning after December 31, 2025

Who is Affected: Individuals receiving ACA premium tax credits

What It Means:
People whose income increases during the year may owe significantly more at tax time if they received advance premium tax credits. This makes accurate income estimation more important when enrolling in ACA plans.

31. International Tax Provisions

Current Law:

• GILTI: 10.5% rate
• FDII: 13.125% rate
• BEAT: 10% rate

New Law:

• GILTI rate increased to 40%
• FDII rate increased to 33.34%
• BEAT rate increased to 10.5%
• Section 899 “retaliatory tax” repealed
• New 1% remittance tax on certain transfers

Start Date: Various effective dates

Who is Affected: Multinational corporations and U.S. companies with foreign operations

What It Means:
Significantly higher tax rates on foreign operations encourage domestic investment and production. The changes make it less attractive to shift profits or operations overseas while providing new revenue from international transactions.

32. Employee Retention Credit (ERC)

Current Law:

• ERC claims allowed for 2020/2021 with open statute of limitations

New Law:

• New restrictions on ERC promoters
• Shortened statute of limitations for claims
• Enhanced penalties for fraudulent claims

Start Date: Changes effective upon enactment, some retroactive

Who is Affected: Businesses and ERC promoters

What It Means:
Reduces fraud and abuse in the ERC program by imposing stricter penalties on promoters who assist with improper claims and limiting the time window for claiming credits.

33. ACA Eligibility Verification

Current Law:

• Standard verification processes for ACA coverage

New Law:

• Enhanced verification requirements for eligibility
• DACA recipients excluded from ACA coverage
• Stricter documentation requirements

Start Date: After enactment

Who is Affected: ACA marketplace participants

What It Means:
Tighter eligibility verification may reduce the number of people who qualify for subsidized health insurance. Enhanced documentation requirements could create barriers for some legitimate applicants.

34. SALT Workarounds Preserved

Current Law:

• Pass-through entity (PTE) tax workarounds allowed in most states

New Law:

• Deductibility of state PTE taxes explicitly preserved in over 30 states
• Protection from federal challenges to these arrangements

Start Date: After enactment

Who is Affected: Pass-through business owners in states with PTE taxes

What It Means:
Business owners in many states can continue to bypass the SALT cap by having their entities pay state taxes directly, preserving a valuable deduction strategy that might otherwise be challenged.

35. Rural & Agricultural Incentives

Current Law:

• Various existing programs and credits

New Law:

• Enhanced incentives for rural investments
• New agricultural business credits
• Expanded qualified opportunity zones for rural areas

Start Date: After enactment

Who is Affected: Rural businesses, farmers, agricultural investors

What It Means:
Provides additional support for rural economic development and agricultural businesses, recognizing the unique challenges faced in rural America and encouraging investment in these areas.

36. IRS Statute of Limitations

Current Law

• Generally 3 years for IRS to assess additional tax after a return is filed.
• 6 years if the taxpayer omits more than 25% of gross income or certain foreign income.
• No limit if a return is never filed or is fraudulent.

New Law

• Extended assessment period for certain credits and deductions, especially the Employee Retention Credit (ERC).
  • For ERC claims for 2020 and 2021, and for any ERC claims filed after July 4, 2025, the IRS now has 6 years (not 3) to audit and assess additional tax.
• Longer audit periods for specific items and transactions, as detailed in the bill.
• Enhanced audit authority for certain credits and complex transactions.

Start Date

• Applies to claims and returns filed after the date of enactment (July 4, 2025), with retroactive effect for ERC claims from 2020 and 2021.

Who is Affected

• All taxpayers, with a particular impact on businesses that claimed the ERC or other credits subject to the extended window.

What It Means

• The standard audit window for most taxpayers remains 3 years, but the IRS now has a 6-year window to audit and assess taxes on ERC claims for 2020 and 2021, as well as any ERC claims filed after July 4, 2025.
• Other specific credits and deductions may also face longer audit periods.
• Accurate recordkeeping is more important than ever, especially for businesses that claimed pandemic-era credits or other complex items.
• The main motivation for this change is to give the IRS enough time to review and audit ERC claims, many of which have been flagged for potential abuse or error.
• Taxpayers should retain all relevant documentation for at least six years if they claimed the ERC or other items subject to extended scrutiny.

In summary:
Most taxpayers will still face a 3-year audit window, but those with ERC claims or certain other credits should prepare for possible IRS scrutiny for up to 6 years after filing. This change is designed to address compliance and enforcement issues related to pandemic-era relief programs and other complex tax credits.

37. Home Mortgage Interest Deduction

Current Law:

• $750,000 cap on deductible mortgage debt
• Mortgage insurance premiums separately treated

New Law:

• $750,000 cap maintained permanently
• Mortgage insurance premiums now included within the cap
• HELOC interest remains non-deductible

Start Date: Taxable years beginning after December 31, 2025

Who is Affected: Homeowners with mortgages

What It Means:
The mortgage interest deduction rules are clarified and made permanent. Including mortgage insurance premiums in the calculation provides a slight benefit for some homeowners, but the cap prevents the deduction from returning to $1 million.

38. Paid Family and Medical Leave Credit

Current Law:

• Credit available through 2025 with limited scope

New Law:

• Credit enhanced and extended permanently
• Higher credit percentages for qualifying employers
• Expanded eligibility criteria

Start Date: After enactment

Who is Affected: Employers offering paid family/medical leave

What It Means:
Stronger incentives for employers to provide paid leave benefits, helping small businesses compete for talent while supporting employee well-being. The permanent nature allows for long-term planning of benefit programs.

These provisions represent a comprehensive overhaul of the tax system, with significant implications for individuals, families, and businesses across all income levels. The changes generally favor domestic production, reduce complexity for small businesses, and provide targeted relief for specific groups while raising revenue through various limitations and international tax changes.

Final Thoughts

The “One Big Beautiful Bill Act” creates both immediate opportunities and long-term planning challenges across 36 major tax provisions. Time-sensitive actions include securing EV credits before September 30, 2025, and completing solar installations by year-end. Business owners should capitalize on doubled Section 179 limits, enhanced child care credits, and permanent 100% bonus depreciation. Families can benefit from new deductions for tips, overtime, and auto loans, while investors must adapt to modified QSBS rules and higher estate tax exemptions. With changes affecting everything from individual rates to international business taxation, the scope of this legislation demands immediate attention and strategic planning.

Consult with your tax professional to understand how these changes apply to your unique situation and to optimize your tax and financial strategies for 2025 and beyond.

Source: https://www.congress.gov/bill/119th-congress/house-bill/1/text