President Trump signed the reconciliation legislation (unofficially dubbed the "One Big Beautiful Bill Act") into law on July 4, 2025. This landmark bill contains sweeping changes to the federal tax system, making it one of the most significant pieces of tax legislation since the Tax Cuts and Jobs Act (TCJA) of 2017. Below is a summary of the most relevant tax provisions affecting individual and business clients.

Individual Taxpayer Highlights

Extended and Permanent TCJA Provisions:

• Makes the TCJA tax rates and brackets permanent

• Permanently eliminates personal exemptions

• Adds an additional year of inflation indexing for brackets beginning in 2025

• Retains increased standard deduction:

  • $31,500 (MFJ)

  • $23,625 (Head of Household)

  • $15,750 (Single / MFS)

    
    

Child Tax Credit:

• Increases the credit to $2,200 per child beginning in 2025, indexed for inflation

• Refundable portion fixed at $1,400 for 2025 ($1,700 indexed)

  
  

Estate and Gift Tax Exemption:

• Permanently increases the exemption to $15 million per individual ($30 million married) starting in 2026, indexed for inflation

SALT Cap Adjustment:

• Raises the deduction limit to $40,000 through 2029 (indexed), with a phasedown above $500,000 MAGI

• Reverts to $10,000 in 2030

Charitable Deduction for Non-Itemizers:

• Beginning in 2026, allows $1,000 deduction (single) or $2,000 (MFJ) for non-itemizers

Tips and Overtime Pay Deductions:

• Above-the-line deductions for tips (up to $25,000) and overtime (up to $25,000 MFJ) for 2025–2028

• Subject to income limits ($150k/$300k phaseouts)

Enhanced Deduction for Seniors:

• $6,000 deduction for seniors (65+), available from 2025–2028, subject to $75k/$150k MAGI limits

Car Loan Interest Deduction:

• Allows up to $10,000 in interest deductions for U.S.-assembled vehicles (2025–2028)

Home Mortgage Interest and Insurance Premiums:

• Makes the $750,000 acquisition debt limit permanent

• Permanently treats mortgage insurance premiums as qualified residence interest

• Excludes home equity indebtedness from qualified residence interest

Other Personal Provisions:

• Makes casualty loss deduction limitations permanent but includes state-declared disasters

• Permanently extends adoption credit, employer-provided childcare credit, education benefits, and paid family leave credit

 Small Business & Business Owner Highlights

Bonus Depreciation:

• Reinstates 100% bonus depreciation for property acquired after Jan. 19, 2025 (previously 40%)

• Especially impactful for M&A structuring

Section 179 Expensing:

• Increases limit to $2.5M with a $4M phaseout threshold (indexed after 2025)

Research & Experimental Costs:

• Permits immediate expensing of domestic R&E costs after 2024

• Allows retroactive application for small businesses (<$31M receipts) back to 2022

• Accelerated write-off elections for previously capitalized expenses (1–2 years)

Qualified Business Income (QBI) Deduction:

• Made permanent at 20%

• Phase-in thresholds increased to $75,000/$150,000

• New $400 minimum deduction for those with at least $1,000 of QBI

Business Interest Deduction:

• Returns to EBITDA calculation under §163(j), effective 2025

Qualified Small Business Stock (QSBS):

• Increases exclusion to $15M or 10x basis

• Asset threshold raised from $50M to $75M (indexed post-2027)

• Holding period reduced from 5 to 3 years (with partial exclusions at 3 and 4 years)

New Markets Tax Credit:

• Permanently extended under §45D

Corporate Charitable Contributions:

• Floor of 1% and cap of 10% of taxable income beginning in 2026

Opportunity Zones:

• Permanently extended with new limitations on low-income community definitions

Other Business Provisions:

• Form 1099 threshold increases to $2,000 in 2026, indexed

• Form 1099-K reporting threshold returns to $20,000 and 200 transactions

International Changes:

• FDII deduction reduced to 33.34%

• GILTI deduction reduced to 40%

• BEAT rate increased to 10.5%

• Changes to FTC and CFC regimes

Energy & Exempt Organization Changes

Clean Energy Credit Terminations:

• Eliminates clean vehicle, commercial clean vehicle, home energy improvement, residential clean energy, refueling property, and efficient home credits (mostly post-2025)

Private College Excise Tax:

• Ranges from 1.4% to 8% based on endowment and student size, starting in 2026

• Applies to institutions with 3,000+ tuition-paying students (up from 500)

• Religious exemption removed

 IRS Procedural Changes

• IRS Direct File program terminated

• Funding for public-private replacement platform

• Lowers penalties for ERC due diligence failures (subject to change)

At Oakhaven CPA, we specialize in helping individuals, families, and business owners navigate the evolving tax landscape with clarity and confidence. The One Big Beautiful Bill Act presents both challenges and opportunities for proactive tax planning.

If you have questions about how these changes may affect your situation—or if you'd like to review your tax strategy in light of the new law—we’re here to help.