On July 4, 2025, President Donald Trump signed into law the “One Big Beautiful Bill Act”, a sweeping package that extends and reshapes many provisions of the 2017 Tax Cuts and Jobs Act (TCJA). The bill’s passing brings changes ahead for individuals and businesses.
Below is a list comparing key tax provisions under current law with those contained in the One Big Beautiful Bill Act. The list was created to assist our clients in understanding the bill’s implications for their planning and operations.
Individual Tax Provisions
- Tax Rates and Brackets
- Current Law: Currently, the highest tax rate of 37% was set to increase to 39.6% after 2025.
- New Law: Makes current rates permanent with inflation indexing for income thresholds (highest rate will stay at 37%)
- Timeframe: Permanent
- State and Local Taxes (SALT) Deduction Cap
- Current Law: $10k cap
- New Law: Cap raised to $40k with 1% increases through 2029; Cap amount phases down once modified adjusted gross income exceeds $500k for all filers; phase down does not fall below $10k
- Timeframe: Temporary (2025-2029)
- Tips Income Deduction
- Current Law: Taxable
- New Law: Deductible up to $25k of reported tip income; deduction available even if the taxpayer does not itemize, phases out once MAGI exceeds $150k for single and $300k MFJ; excludes highly compensated
- Timeframe: Temporary (2025-2028)
- Overtime Income Deduction
- Current Law: Taxable
- New Law: Deductible up to $12,500 for single and $25,000 for joint filer; deduction available even if the taxpayer does not itemize; phases out once MAGI exceeds $150k for single and $300k MFJ
- Timeframe: Temporary (2025-2028)
- Standard Deduction
- Current Law: $15k (single); $30k (MFJ)
- New Law: Increased to $15,750 (single) , $23,625 (HOH) $31,500 (MFJ) with inflation adjustments
- Timeframe: Permanent, beginning 2025
- Senior Deduction
- Current Law: Additional standard deduction for 65+
- New Law: Adds $6k deduction for individuals aged 65+; phases out once MAGI exceeds $75k for single and $150k for MFJ; deduction available even if the taxpayer does not itemize
- Timeframe: Temporary (2025-2028)
- Itemized Deduction Limit
- Current Law: No limitation
- New Law: Limits itemized deductions to 2/37 of the lesser of: (i) itemized deduction amount; or (ii) amount of taxable income exceeding §1(j) threshold for 37% tax bracket. Revised limitation does not apply to §199A qualified business income deduction.
- Timeframe: Permanent, beginning 2026
- Child Tax Credit
- Current Law: $2k per child
- New Law: Increased to $2,200 per child; indexed for inflation
- Timeframe: Permanent, beginning 2025
- Estate & Gift Tax Exemption
- Current Law: $13.99M per person
- New Law: Raised to $15M with annual inflation adjustments
- Timeframe: Permanent, beginning 2026
- Trump Accounts
- Current Law: N/A
- New Law: $1k account contribution from federal government for babies born in 2025 through 2028
- Auto Loan Interest Deduction
- Current Law: N/A
- New Law: $10k deduction for new car loan interest on vehicles assembled in the U.S.; phases out once MAGI exceeds $100k for single and $200k MFJ; deduction available even if the taxpayer does not itemize
- Timeframe: Temporary (2025-2028)
- Charitable Deduction for Non-Itemizers
- Current Law: Not available after 2021
- New Law: Non-itemizers can still deduct qualified charitable contributions of $1k for single and $2k for MFJ
- Timeframe: Permanent, beginning in 2026
- Charitable Deduction for Individuals who Itemize
- Current Law: Taxpayers who itemize can deduct a portion of their charitable contributions, subject to a specified limitation based on the type of contribution
- New Law: Limits the charitable deduction for taxpayers who itemize by providing a deduction only for charitable contributions to the extent that they exceed 0.5% of the taxpayer’s contribution base
- Timeframe: Permanent, beginning in 2026
- Gambling Losses
- Current Law: Itemized Deduction up to 100% of winnings
- New Law: Itemized Deduction limited to 90% of winnings
- Timeframe: Permanent, beginning 2026
Business Tax Provisions
- Pass Through Deduction (199A)
- Current Law: 20% deduction for pass-through income; deduction subject to phaseout for specified service trades or businesses (SSTBs); deduction limitations based on taxable income, wages paid, and the presence of SSTBs.
- New Law: Deduction remains at 20%; phase out amounts are increased (expands the deduction limit phase-in range by increasing the $100k (MFJ) and $50k (single filers) amounts to $150k and $75k respectively), and a new minimum $400 deduction is added for taxpayers with at least $1k of QBI
- Timeframe: Permanent, beginning 2026
- Bonus Depreciation
- Current Law: 40% in 2025
- New Law: Allowance increased to 100% of property acquired and placed in service on or after January 19, 2025
- Timeframe: Permanent, beginning January 19, 2025
- Qualified Production Property “Manufacturing Property”
- Current Law: Generally depreciated over 39 years
- New Law: Bonus depreciation allowed on manufacturing property where construction begins after January 19, 2025, and before January 1, 2029, and must be placed in service after July 4, 2025, and prior to 2031.
- Section 179 Expensing
- Current Law: Allows businesses to expense up to $1,160,000 of qualifying property, with a phase-out threshold beginning at $2,890,000 both indexed for inflation
- New Law: Increases the maximum amount a taxpayer may expense under Sec. 179 to $2,500,000 and increases the phaseout threshold amount to $4,000,000
- Timeframe: Beginning 2025
- R&D Deduction
- Current Law: 5 year amortization
- New Law: Allows full expenses for domestic R&D from January 1, 2025. In addition, the bill provides small businesses with the option to apply this change retroactively back to 2022 through the amended returns. It would also allow taxpayers to accelerate any remaining Sec. 174 deductions
- Timeframe: Permanent, beginning 2025
- SALT Cap Workarounds for Pass-Throughs
- Current Law: Individual SALT deduction capped at $10k, which caused 36 states and 1 locality to implement an entity-level PTET SALT deduction
- New Law: No changes
- Excess Business Loss Limitation Carry
- Current Law: Limits pass-through business losses through 2028. Disallowed losses become NOLs and can be used in subsequent years, subject only to NOL rules.
- New Law: No change. Expanded to estates and trusts
- Timeframe: Permanent
- Section 1202
- Current Law: Provides for the partial exclusion of gain on the sale of qualified small business stock (QSBS) held for more than five years. For stock acquired after September 27, 2010, the exclusion is 100%; for stock acquired in earlier periods, the exclusion is 50% or 75%, depending on the acquisition date
- New Law: Modifies the QSBS exclusion to provide a tiered exclusion determined on the years the taxpayer holds the QSBS:
- 50% exclusion if held for three years;
- 75% exclusion if held for four years; and
- 100% exclusion if held for five or more years.
- The bill also increases eligibility limit on the corporation’s aggregate gross assets at the time of issuance from a $50 million limit to a $75 million limit.
- Employee Retention Credit (ERC)
- Current Law: Employers had until April 15, 2024 to file ERC claims for the 2020-year, and until April 15, 2025, to file the ERC claims for the 2021 year. The IRS has a 3 – year statute of limitations for 2020 and early 2021 claims, and a 5-year statute of limitations for the Q3, Q4, 2021 claims.
- New Law: No claims for third and fourth quarter 2021 submitted after January 31, 2024, will be processed. The statute of limitation period for ERC claims for third and fourth quarters 2021 is extended to 6 years, beginning with the date the claim was originally filed.
- Form 1099 Reporting
- Current Law: The general Form 1099 reporting threshold remains at $600 and applies to payments made in the course of a trade or business.
- New Law: Increases the information reporting threshold for certain payments to persons engaged in a trade or business and payments of remuneration for services to $2,000 in a calendar year (from $600) with the threshold amount to be indexed annually for inflation in calendar years after 2026
- Timeframe: Beginning in 2026
Economic Outlook and Legislative Path
The bill is projected to reduce federal tax revenue by $5 trillion over 10 years on a conventional basis. Supporters cite potential boosts in GDP, job creation, and capital investment. Opponents warn of rising deficits and reduced health care and social program funding.
What This Means for You
The “One Big Beautiful Bill” has broad implications across income levels and sectors. Whether you’re an individual planning for retirement or a business investing in growth, proactive planning will be key as the legislation takes shape.
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.
Suttle & Stalnaker, PLLC is ready to help you. If you have questions about how this legislation could impact your strategy or next steps, we encourage you to connect with your advisor.