On July 4, 2025, President Trump signed the One Big Beautiful Bill into law. This landmark legislation extends the Tax Cuts and Jobs Act’s provisions that were set to expire and makes many of them permanent. It also establishes a wide range of new provisions designed to provide tax-savings opportunities to businesses and individuals alike.

Below is a look at some of the key provisions in the final version of the bill, particularly those that we believe are most likely to impact you and your business.

Business Provisions

Bonus Depreciation

The legislation permanently extends the Section 168 additional first-year (bonus) depreciation deduction. The deduction is 100% for property acquired and placed into service on or after January 19, 2025. This means businesses can fully deduct the cost of eligible assets in the year they are placed in service. 

Section 179 Expense Limitation

The legislation increases the maximum amount a taxpayer can expense on depreciable business equipment under Section 179 from $1.25 million to $2.5 million. A phaseout applies when the total cost of qualifying property placed in service exceeds $4 million, up from the previous $3.13 million threshold.

Interest Limitation Rules 

The legislation reinstates the EBITDA limitation under Section 163(j) – the deduction for business interest expense – for tax years beginning after December 31, 2024. This change allows taxpayers to add back depreciation, amortization, and depletion to adjusted taxable income, effectively increasing the amount of interest expense that can be deducted by raising the 30% limitation threshold.

R&D Expenses Under Section 174

The legislation permanently suspends the Tax Cuts and Jobs Act’s (TCJA) requirement that research and development (R&D) expenses be capitalized and amortized over a five-year period. Businesses are allowed to immediately deduct eligible domestic R&D expenses paid or incurred for tax years beginning after December 31, 2024. However, expenditures for research conducted outside the U.S. must continue to be capitalized and amortized over 15 years.

The legislation also includes a provision for small businesses with average annual gross receipts of $31 million or less. These businesses are eligible to retroactively deduct eligible expenses for tax years beginning after December 31, 2021, on an amended return.

All taxpayers – large and small – who complied with the Section 174 requirements will be permitted to elect to accelerate the remaining deductions over a one- or two-year period.

New Bonus Depreciation for Manufacturing QPP

The legislation provides an elective 100% first-year depreciation allowance for newly constructed qualified production property. Qualified production property is generally nonresidential real property used in manufacturing. This provision applies to construction beginning after January 19, 2025 and through 2029.

SALT Deduction for Pass-Through Entities

The legislation preserves the deductibility of pass-through entity taxes (PTETs) for all pass-through businesses, removing earlier proposals that would have limited this benefit or excluded certain businesses. This means that pass-through businesses may have alternatives available to circumvent the SALT cap, now increased to $40,000 from $10,000, and discussed further below in the Individual Provisions section.

Excess Business Losses

The legislation makes the Section 461(I)(1) limitation on excess business losses (EBL) of noncorporate taxpayers permanent, which limits non-corporate taxpayers to only deduct losses up to $250,000 for single filers ($500,000 for joint filers) with the balance carried forward. Language in the Senate Finance Committee version of the bill would have changed the treatment of carried over EBLs, however, that language was dropped from the final bill.

Clean Energy Provisions

The legislation repeals or phases out a large number of clean energy credits that were established by the Inflation Reduction Act, particularly as they relate to electric vehicles, property investments in energy efficiency, clean energy, and alternative fuels.

Individual Provisions

Tax Cuts and Jobs Act Extensions

The legislation makes the TCJA individual tax rates permanent and would modify the inflation adjustment mechanism for individual tax brackets.

The following TCJA provisions are also made permanent:

  • Standard deduction: The TCJA’s increased standard deduction amounts have been made permanent. For tax years 2025 – 2028, the standard deduction for married taxpayers filing jointly increases by $2,000. It increases by $1,500 for heads of household and $1,000 for all other taxpayers.
  • Personal exemptions: The deduction for personal exemptions is permanently set at zero. The bill legislation also provides a temporary (tax years 2025 – 2028) $6,000 deduction for taxpayers aged 65 or older. This “senior bonus” begins to phase out for taxpayers with modified adjusted gross income (MAGI) over $75,000 (single) or $150,00 (married filing joint).
  • SALT deduction: Perhaps the most widely debated provision in both chambers of Congress, the legislation sets the limit on the federal deduction for state and local taxes (the SALT cap) to $40,000 from the current $10,000. The limit adjusts for inflation, moving to $40,400 in 2026 and increases 1% per year through 2029. Starting in 2030, the cap will revert to $10,000. The amount of the deduction phases down for taxpayers with MAGI over $500,000 in 2025. The MAGI threshold will adjust for inflation through 2029. The phasedown reduces the SALT deduction by 30% of the amount the MAGI exceeded the threshold, but the limit on the SALT deduction could never go below $10,000.
  • Qualified business income: The Section 199A qualified business income deduction is made permanent but the deductible amount for qualified businesses remains at 20%.
  • Alternative minimum tax (AMT): The legislation makes the increased AMT exemption amount permanent and reverts the exemption phaseout thresholds to their 2018 levels of $500,000 ($1 million married filing joint), indexed for inflation. The phaseout of the exemption is 50% of the amount by which the alternative minimum taxable income exceeds the threshold amount.
  • Miscellaneous itemized deductions: The bill makes permanent the TCJA’s suspension of 2% AGI miscellaneous itemized deductions (such as unreimbursed employee expenses, investment fees, tax prep fees, hobby expenses, etc.) but carves out an exception for unreimbursed employee expenses for eligible educators.
  • Pease Limitation on Itemized Deductions: The bill permanently eliminates the overall limitation on itemized deductions known as the Pease limitation. A new overall limitation will limit the value of itemized deductions to 35 cents on the dollar for taxpayers in the top (37%) bracket.
  • Child tax credit: The legislation permanently increases the amount of the child tax credit to $2,200 per child beginning in 2025. The credit amount will be indexed for inflation in subsequent years. It also makes permanent the $1,400 refundable child tax credit, adjusted for inflation. Additionally, it makes permanent the increased income phaseout thresholds of $200,000 ($400,000 married filing joint) as well as the $500 nonrefundable credit for each dependent other than a qualifying child.
  • Estate and gift tax exemption: The estate and gift tax exemption and generation skipping transfer tax exemption is permanently increased to $15 million ($30 million for married filing joint). This amount will be indexed for inflation after 2025. 

Taxation of Tips

The legislation temporarily exempts up to $25,000 of qualified tips from taxation through an “above-the-line” deduction, meaning it is available to taxpayers claiming the standard deduction.

Qualified tips are received in an occupation that customarily and regularly receives tips, and a list of qualifying occupations will be published for further guidance.

The deduction phases out for workers making more than $150,000 (single) or $300,000 (married filing joint) per year, and only applies for tax years 2025 through 2028.

Taxation of Overtime

Similarly, the legislation exempts up to $12,500 in overtime wages ($25,000 for joint filers) from taxation via an above-the-line deduction. The deduction phases out for workers making more than $150,000 (single) or $300,000 (married filing joint) per year, and only applies for tax years 2025 through 2028.

The legislation defines qualified overtime compensation as overtime paid to an individual required under Section 7 of the Fair Labor Standards Act that is in excess of the regular rate, such as time-and-a-half.

Overtime deductions are only allowed for qualified overtime compensation if the total amount of qualified overtime compensation is reported separately on Form W-2.

Interest on Car Loans

The legislation provides a temporary (tax years 2025-2028) deduction for loan interest on qualified passenger vehicles. The deduction is only applicable to vehicles whose final assembly took place in the United States.

The deduction is capped at $10,000 per year and will phase out for taxpayers with MAGI in excess of $100,000 ($200,000 for married filing joint).

Charitable Contribution Deduction Changes

The legislation establishes a charitable contribution deduction for individuals who do not itemize. The deduction is up to $1,000 ($2,000 married filing joint) for non-itemizers. For individuals who itemize, a new floor is introduced where deductions are only permitted for contributions exceeding 0.5% of your AGI.

529 Plans

The legislation expands the usages of Section 529 savings plans to allow tax-exempt distributions to be used for additional educational expenses in connection with elementary or secondary school attendance, as well as additional higher education expenses, including “qualified post-secondary credentialing expenses.”

Scholarship Granting Contributions Tax Credit

The legislation offers a new tax credit of up to $1,700 for charitable contributions to a scholarship-granting organization. There is a $4 billion annual cap beginning in 2027, and the credit will be allocated on a first-come, first-served basis up to the cap.

The legislation also includes a provision which excludes scholarships for qualified elementary or secondary education expenses from income for eligible students.

Tax-Favored Savings Accounts for Children

The legislation establishes new tax-favored savings accounts for children under the age of 8 when the account is established. These so-called “Trump accounts” are structured as a form of an individual retirement account (IRA), but not a Roth IRA.

Contributions to these accounts will be limited to $5,000 per year, adjusted for inflation after 2027, until the beneficiary turns 18. A new Section 128 will also allow for employer contributions to Trump accounts, which will not be included in the employee’s income.

Distributions for qualified expenses (such as higher education expenses), permitted after age 18, will be subject to capital gains tax. Other distributions will be subject to income tax plus an additional 10% if the beneficiary is under age 30.

The legislation also appropriates $410 million to provide a one-time tax credit of $1,000 for opening a Trump account for children born after December 31, 2024 and before January 1, 2029, who are U.S. citizens at birth.

Kreischer Miller's Tax Strategies Team is Here to Help

With the passage of one of the largest pieces of tax legislation in years, our tax professionals stand ready to help you understand the provisions and how they will impact you and your business.

If you have any questions about this legislation or any other tax matters, please contact your Kreischer Miller relationship professional or any member of our Tax Strategies team.