On Independence Day, President Donald J. Trump signed into law the much anticipated One Big Beautiful Bill, delivering sweeping changes to the tax code with immediate and long-term implications for both individuals and businesses.
We’ve broken down the key highlights below to help you understand how these changes might impact your tax planning and financial outlook.
BUSINESS TAX CHANGES
- Bonus Depreciation Expanded
100% bonus depreciation is back permanently — available for qualifying assets placed in service after January 19th, 2025.
- Qualified Production Property
Qualified Production Property became a new asset classification for the portion of a newly constructed building used for a qualified production activity. These assets are eligible for 100% bonus depreciation if they meet all of the requirements and are placed in service before January 1, 2031.
- Section 179 Expensing Boosted
The Section 179 limit has been increased to $2.5 million with a phase-out threshold of $5 million, offering even more flexibility for small and mid-sized businesses.
- Pass-Through Deduction Reinstated
The 20% Qualified Business Income (QBI) deduction has been extended permanently, with some simplified rules for small businesses.
- Relaxed Business Interest Deduction Limitations
The limitation on deducting business interest will be permanently restored to the original EBITDA limitations in effect for 2017 through 2022.
- Research & Development Costs
The requirement to capitalize and amortize R&D costs has been retroactively repealed, restoring the option to immediately expense qualified research costs.
INDIVIDUAL TAX CHANGES
- Lower Marginal Rates
Nearly all seven individual tax brackets have permanently been trimmed by 1–3 percentage points. The top rate is now 37% (down from 39.6%). The brackets will continue to be annually adjusted for inflation.
- Child Tax Credit Increased
The Child Tax Credit has increased to $2,200 per child under age 17, partially refundable, and phased out at higher income thresholds.
- Standard Deduction Raised
The standard deduction jumps to $30,000 for married filers and $15,000 for singles, reducing the need to itemize.
- State and Local Tax (SALT) Deduction
The $10,000 SALT cap has been increased to $40,000 for 2025 for taxpayer’s with under $500,000 of income, indexed for inflation through 2029. In 2030, it is scheduled to return to the current $10,000 limit.
- No Tax on Tips
Provides up to a $25,000 deduction for qualified tips received during 2025 through 2028. This amount is reduced for married filers with over $300,000 of income, $150,000 for single filers.
- No Tax on Overtime
Provides up to a $25,000 deduction for qualified overtime wages for married filers, $12,500 for single filers, received during 2025 through 2028. This amount is reduced for married filers with over $300,000 of income, $150,000 for single filers.
7. Charitable Contributions without Itemizing
Due to the reduced ability to itemize deduction, married filers will be able to deduct up to $2,000 of charitable contributions, $1,000 for single filers, as an above the line deduction.
- Vehicle Interest Deductible
Up to $10,000 of qualified interest of vehicles that had their final assembly completed in the US is deductible for married filers with less than $200,000 of income, $100,000 for single filers. This would apply for 2025 through 2028.
- Estate Tax Exemption Doubled
The federal estate and gift tax exemption has increased to $15 million per person, indexed for inflation, starting on 2026 with no set expiration.
WHAT TO DO NOW
These provisions are complex and vary based on your specific circumstances. We’re here to help you navigate the changes and adjust your tax strategy accordingly.
Please contact our office or your HDGP advisor to schedule a mid-year tax planning session or reach out if you’d like a personalized breakdown of how the One Big Beautiful Bill affects your family or your business.
WRITTEN BY DONALD TRUMMER, CPA, DIRECTOR OF TAX ADVISORY SERVICES