A sweeping tax reform, dubbed the One Beautiful Bill Act(OBBA), has reshaped the US tax landscape. This follow-up to the 2017 TCJA introduces permanent and expanded tax provisions for both businesses and individuals.
Whether you're a founder, CPA, or solo filer, this breakdown covers the most impactful updates, including bonus depreciation, QBI deductions, foreign tax credits, SALT caps, and even TrumpAccounts.
Business Provisions
Bonus Depreciation (MadePermanent)
Before: 100% through 2022, 40% in 2025, phasing down
After: 100% permanent for property acquired post-Jan 19, 2025
R&E Expenditures: Full Deduction
Before: Amortized over 5 years post-2021
After: Deductible post-2024, small businesses (<$31M receipts) canclaim retroactively to 2022
QBI Deduction Now Permanent
Before: 20% deduction, set to expire 2025
After: Permanent, with expanded eligibility
Section 179 Deduction Increased
Before: Limited expensing for business assets
After: Increased limits post-2024
Interest Exclusion
Before: No exclusion for rural/agricultural loans
After: Interest on such loans excluded for qualified lenders
Low-Income Housing Credit
Before: Standard credit structure
After: Strengthened and expanded
International & IRS
International Tax (FDII/GILTI)
Before: FDII at 37.5%, GILTI at 50%, set to expire 2025
After: Permanent, FDII reduced to 33.34%, GILTI to 40% post-2025
CFC Tested Income
Before: Standard classification under TCJA
After: Revised classification, adjusting included/excluded income types
Foreign Tax Credit
Before: Standard credits for CFC income taxes
After: Modified to limit excessive credits, prevent double taxation
IRS Procedural Provisions
Before: IRS Direct File Pilot program in place
After: Terminated within 30 days, replaced with public-privatepartnership research
Retention Penalties Simplified
Before: Higher penalties with cumulative caps
After: $1,000 per violation, no cumulative cap
Individual Provisions
Tax Rates
Before: 10%–37% brackets, set to expire end of 2025
After: Permanent 10%–37% brackets
Personal Exemptions
Before: Eliminated under TCJA
After: No personal exemptions; seniors (65+) get $6,000 deduction(2025–2028, phases out at $75,000/$150,000 income for single/joint filers)
Standard Deduction (2025)
Before: $30,000 (joint), $22,500 (HoH), $15,000 (single/MFS)
After: $31,500 (joint), $23,625 (HoH), $15,750 (single/MFS),inflation-adjusted
SALT Deduction
Before: $10,000 cap, set to expire 2025
After: $40,000 cap in 2025, rises 1% yearly until 2029, drops to $10,000in 2030. Reduced 30% for income >$500,000
Child Tax Credit
Before: $2,000, refundable up to $1,400, phaseout at $400,000/$200,000(joint/others)
After: $2,200 (inflation-adjusted), refundable up to $1,400, samephaseout, SSN required
AMT Rules
Before: Adjusted under TCJA, set to expire 2025
After: Reverts to 2018 levels for high earners
Mortgage Insurance Premiums
Before: Deduction expired
After: Deductible again
Estate Tax Exclusion
Before: $13.99M (2025, inflation-adjusted), set to halve post-2025
After: $15M starting 2026
Tax Credit for Donations
Before: Limited credits for specific donations
After: Credit for contributions to scholarship-granting organizations
529 Plans
Before: Limited to higher education
After: Expanded to elementary, secondary, and homeschooling expenses
Charitable Deduction (Non-Itemizers)
Before: Temporary during COVID, expired
After: Reinstated for non-itemizers
Automobile Loan Interest
Before: Not deductible
After: Up to $10,000 deductible for cars purchased post-2024 (2025–2028)
New Individual Provisions
No Tax on Tips
Before: Tips taxed as regular income
After: Deduction up to $25,000 for tips, phases out at $150,000/$300,000(single/joint), expires 2028. SSN required. Beauty service industry included inemployer SS tax credit
No Tax on Overtime
Before: Overtime taxed as regular income
After: Deduction up to $12,500, phases out at $100,000/$200,000(single/joint), expires 2028. SSN required
Trump Accounts
Before: Did not exist
After: Tax-favoured savings accounts for newborns, seeded with $1,000,IRA-like rules
Big Changes. Bigger Impacts.Now What?
The bill reshapes the taxlandscape for years to come. Whether you're a taxpayer,advisor, or business owner, it's time to start planning.
Understand how the new taxbill impacts your business, reach out to FinStackk today.
Abbreviations and Full Forms
- TCJA: Tax Cuts and Jobs Act
- R&E: Research and Experimental
- QBI: Qualified Business Income
- FDII: Foreign-Derived Intangible Income
- GILTI: Global Intangible Low-Taxed Income
- CFC: Controlled Foreign Corporation
- IRS: Internal Revenue Service
- AMT: Alternative Minimum Tax
- SSN: Social Security Number
- HoH: Head of Household
- MFS: Married Filing Separately
- IRA: Individual Retirement Account
- SALT: State and Local Taxes