News

On July 4, President Trump signed the much-anticipated “One Big Beautiful Bill Act” (OBBB) into law, following approval by both the Senate and the House of Representatives. This sweeping legislation permanently extends and reshapes many provisions of the 2017 Tax Cuts and Jobs Act (TCJA), with wide-ranging implications for individuals, businesses, nonprofits, and international taxpayers.

We’re continuing to monitor implementation and are committed to helping our clients understand the law’s implications for planning and operations.

What’s in the “One Big Beautiful Bill”?

The final version of the OBBB builds on earlier proposals from both chambers, with several notable revisions and additions. Key highlights include:

Individual Provisions

• Permanent Tax Rates: TCJA’s seven-bracket system becomes permanent, with inflation adjustments. The 10% and 12% brackets receive an extra year of indexing.
• Standard Deduction & Senior Bonus: The higher standard deduction is locked in. A $6,000 “senior bonus” deduction applies from 2025–2028, phasing out at $75,000/$150,000 MAGI.
• Child Tax Credit: Increases to $2,200 per child ($1,700 refundable), indexed for inflation.
• Child & Dependent Care Credit: Expanded to 50% of eligible expenses with tiered AGI-based phaseouts.
• Estate & Gift Tax: Exemption rises to $15 million per individual in 2026, indexed.
• Tips & Overtime Deductions: Above-the-line deductions up to $25,000 for tips and $12,500 ($25,000 if filing jointly) for overtime for 2025–2028. Phases out at $150,000/$300,000 MAGI.
• Car Loan Interest: Deduct up to $10,000 on interest for U.S.-assembled personal vehicles (2025–2028), with MAGI-based phaseouts.
• Charitable Contributions: Non-itemizers can deduct up to $1,000 ($2,000 if filing jointly). For those itemizing deductions, contributions exceeding  0.5% of AGI are deductible.
• SALT Deduction Cap: Temporarily raised to $20,000 ($40,000 if filing jointly) from 2025–2029, with inflation adjustments and a phase-out above $250,000/$500,000 MAGI. The phase-out cannot reduce the SALT deduction below $5,000/$10,000. The PTET deduction was not effected.
• QBI Deduction: Section 199A is made permanent at 20%, with expanded phase-in limits and a $400 minimum deduction.
• Pease Limitation: Permanently repealed beginning in 2026. A new cap limits itemized deductions.
• Trump Accounts: Tax-deferred IRAs for minors with a $1,000 federal contribution (2025–2028) and structured withdrawal rules.

Business & Nonprofit Provisions

• Bonus Depreciation: 100% expensing restored permanently for property placed in service after Jan. 19, 2025.
• Section 179: Expensing limit increased to $2.5M with a $4M phaseout.
• R&D Expensing: Full expensing for domestic R&D from 2025. Retroactive relief to 2022 available for small businesses.
• Interest Deductibility: Section 163(j) returns to an EBITDA-based limit permanently.
• Employer-Provided Child Care Credit: Credit expanded to 40% (50% for eligible small businesses) of expenses ($500,000 cap; $600,000 for small businesses), inflation-adjusted.
• Qualified Small Business Stock: The maximum gain exclusion increased to $15 million.  Gains now excluded at 50% (for stock held 3 years), 75% (for stock held 4 years), 100% (for stock held 5+ years). Asset limit rose from $50M to $75M.

Clean Energy Credits

Multiple energy credits are terminated or phased out, including EV, solar, hydrogen, and energy-efficient property credits. See the full list at the IRS Clean Energy Credits Page here.

International Tax Changes

The bill introduces several international tax provisions that could impact non-U.S. operations, investments, or assets:

• GILTI and FDII renamed to “net CFC tested income” (NCTI) and “foreign-derived deduction eligible income,” (FDDEI) with reduced deductions and an approximate 14% effective U.S. tax rate.
• Foreign tax credit rules tightened, raising the risk of double taxation for Canadian individuals and corporations with global income subject to both U.S. and Canadian tax.
• Subpart F income and NCTI can now be included in income by U.S. shareholders that own CFC stock for any portion of the tax year rather than only if the U.S. shareholder held stock at the end of a tax year.
• BEAT changes increase the rate from 10% to 10.5% (this was set to rise to 12.5% under the TCJA beginning in 2026).
• Revised sourcing rules for U.S.-produced goods allows 50% of income to be foreign-sourced income with respect to calculation of the foreign tax credit limitation.
• Elimination of downward attribution has generally been restored after its elimination under the TCJA.

What This Means for You

The “One Big Beautiful Bill” has broad implications across income levels and sectors. Whether you’re planning for retirement, managing a growing business, or overseeing a nonprofit, understanding the implications of this legislation is critical.

These are just a few of the many potential changes we expect over the coming months. We’re closely monitoring developments and will continue to provide updates with clarity, context, and a focus on what matters most to you.

If you have questions about how this legislation could impact your strategy or next steps, we encourage you to connect with your FLSV advisor.