The One Big Beautiful Bill Act

The One Big Beautiful Bill Act

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The One Big Beautiful Bill Act Summary

The “One Big Beautiful Bill Act” (H.R. 1, signed July 4, 2025) serves as a comprehensive tax reform package, primarily designed to make the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent while introducing new, temporary tax relief for individuals and businesses.

Below is a bulleted summary of the income tax provisions, as passed by the House and reported in 2025:

Individual Income Tax Provisions

  • Permanence of TCJA Rates: Permanently extends the lower individual income tax rates (10%, 12%, 22%, 24%, 32%, 35%, and the top 37% rate), which were set to expire at the end of 2025.
  • Permanent Higher Standard Deduction: Makes the doubled standard deduction permanent ($31,500 for married filing jointly in 2025) and continues annual inflation adjustments.
  • Expanded SALT Deduction: Increases the State and Local Tax (SALT) deduction cap to $40,000 for 2025–2029 for taxpayers with AGI under $500,000, with the cap reverting to $10,000 in 2030.
  • New “No Tax on Tips” Deduction: Creates a temporary (2025–2028) “above-the-line” deduction for up to $25,000 in qualified tip income, phasing out for high earners ($150,000+ single / $300,000+ joint).
  • New “No Tax on Overtime” Deduction: Allows a temporary (2025–2028) deduction for qualifying overtime pay up to $12,500 annually ($25,000 joint), subject to income phaseouts.
  • New Senior Deduction: Provides an additional, temporary (2025–2028) $6,000 deduction for individuals 65 or older (per person), phasing out for incomes over $75,000 single/$150,000 joint.
  • Car Loan Interest Deduction: Allows a temporary (2025–2028) deduction of up to $10,000 in interest for new, U.S.-assembled vehicles.
  • Child Tax Credit (CTC) Increase: Permanently increases the CTC to $2,200 per child (from $2,000) starting in 2025.
  • Trump Savings Accounts: Creates “Trump Accounts” for children (born 2025–2028), with a $1,000 federal contribution and tax-deferred growth for investment in U.S. stock index funds.
  • Itemized Deduction Changes: Permanently disallows most miscellaneous itemized deductions but allows a $1,000 ($2,000 joint) charitable deduction for non-itemizers.

Business and Investment Tax Provisions

  • Permanent Pass-Through Deduction: Makes the 20% Section 199A deduction for pass-through business income permanent.
  • 100% Bonus Depreciation: Permanently restores 100% bonus depreciation for “qualified property” (tangible property with a recovery period of 20 years or less) acquired on or after Jan. 20, 2025.
  • Immediate R&E Expensing: Permanently allows immediate, 100% deduction of domestic research and experimental (R&E) expenditures.
  • Increased Section 179 Expensing: Increases the Section 179 deduction limit to $2.5 million for qualifying property placed in service.
  • Opportunity Zones Extension: Permanently extends and reforms Opportunity Zone tax incentives, with new designations every 10 years and enhanced benefits for rural areas.
  • Small Manufacturer Threshold: Increases the dollar threshold for defining a “small manufacturing” business.

Other Tax Changes

  • Estate Tax Exemption: Permanently increases the estate, gift, and generation-skipping transfer tax exemption to $15 million per individual ($30 million for married couples), indexed for inflation.
  • 529 Plan Expansion: Expands the definition of qualified higher education expenses to include specific K-12 expenses (up to $20,000) and postsecondary credentialing programs.
  • Clean Energy Credit Repeal: Accelerates the termination of several clean vehicle and residential energy credits, with many ending in 2025 or 2026.
  • Remittance Tax: Imposes a 1% excise tax on certain electronic money transfers to foreign countries.
  • 1099-MISC/NEC Threshold: Increases the threshold for issuing 1099-MISC/NEC forms from $600 to $2,000.
  • Employer-Provided Meals (Convenience of Employer): These become 100% nondeductible (0%).
    • Applies to: Coffee, snacks, water, meals in on-site cafeterias, and food for late shifts or emergencies.
    • Why: Changes to IRC §274(o) disallow deductions for these expenses.
  • Business Meals (Clients/Prospects): Remain 50% deductible, provided business is discussed and an employer representative is present.

 

This material is for informational purposes only and does not constitute tax, legal, or accounting advice; it should not be used or relied upon as such, and you should always consult your own qualified tax advisor for advice specific to your situation before making any decisions

 

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