The One Big Beautiful Bill Act (OBBBA), signed by President Trump on July 4, 2025, makes sweeping changes to the tax code, though some of the provisions merely make permanent items from the Tax Cuts and Jobs Act (TCJA) of 2017.
The bill touches almost every aspect of taxation; we can’t cover them all, but here are some highlights:
Individual Tax Provisions
- The standard deduction is increased to $15,750 for individual filers and $31,500 for married joint filers, to be indexed annually for inflation, retroactive to January 1, 2025.
- The child tax credit is increased from $2,000 to $2,200, also subject to inflation adjustments.
- The state and local tax (SALT) cap rises from $10,000 to $40,000 for 2025. Increases of 1% will be applied annually though tax year 2029, but in 2030, the cap will revert to $10,000. The temporary $40,000 cap, however, is subject to phase-out at higher income levels.
- The estate and gift tax exemption is increased to $15 million for 2025 and will be inflation-indexed from 2026 onward.
- Casualty loss deductions, currently limited to federally declared disaster-related losses, have been expanded to cover certain state- declared disaster events. Eligible events will include floods, fires, storms, and other catastrophes, so long as the state affected makes an official declaration of disaster.
Business Tax Provisions
- The OBBBA increases bonus depreciation to 100% and makes this provision permanent. No phase-outs.
- Bonus depreciation is extended to cover qualified production (manufacturing) property. Such property, if acquired and placed in service on or after January 19, 2025, can be 100% expensed.
- Domestic research and experimental (R&E) expenses incurred in the United States can now be fully expensed, rather than amortized over 5 years. Foreign-incurred R&E costs will still require 15 years of amortization.
Section 199A
Section 199A of the 2017 Tax Cuts and Jobs Act (TCJA) allows domestic pass-through business owners to deduct up to 20% of qualified business income (QBI) from their individual income tax returns, subject to certain income limitations.
The OBBBA makes the 20% QBI deduction permanent.
The OBBBA allows owners of Specialized Trade and Service Businesses (SSTBs―e.g., law, healthcare, finance & accounting, investment banking) to deduct QBI, subject to phase-out thresholds at incomes starting at $75,000 for individuals and $150,000 for married joint filers.
The bill also institutes a $400-minimum deduction for individuals from active trades or businesses in which they “materially” participate.
These represent only a few highlights and are by no means exhaustive.
We invite you to consult Rigby Financial Group’s tax, estate, and financial planning experts. We would love to help you update your personal and / or business planning, based upon the new tax law’s provisions, and help you navigate them to maximum benefit.
Please click here to email us directly―our team is always at your service―the reason we’re here at all is to be here for you!
Until next time –
Peace,
Eric
For previous posts on the progress of the OBBBA, see:
One Big Beautiful Bill: Proposed Senate Changes to House Tax Provisions
Revised House Reconciliation Bill = Tax Benefits!
Real Estate Investors Benefit via New House Reconciliation Bill’s Tax Changes
