If you’re still trying to wrap your head around the One Big Beautiful Bill (OBBB), you’re not alone. Between headlines, political chatter and technical jargon, it’s tough to know what actually made it into the final law — and what those changes mean for you.
That’s exactly what we covered in our recent webinar. Here's an easy-to-read rundown of some of the biggest updates for individuals and business owners — and a few tax planning opportunities to keep on your radar.
Prefer to watch instead of read? The full webinar recording is here. 👇
Key Changes for Individual Taxpayers
SALT Deduction Cap Raised
There’s good news for taxpayers in high-tax states. Under the OBBB, the deduction limit for state and local taxes (“SALT”) increased from $10,000 to $40,000 for married couples who file jointly.
However, there are a few catches:
- Above $500,000 of modified adjusted gross income (MAGI) — the benefit begins to phase out
- At $600,000 of MAGI — you’re back to the $10,000 cap
- The increase is temporary and will sunset in 2030
Ultimately, this means more taxpayers can itemize again instead of using the standard deduction.
New & Expanded Deductions
These provisions apply for 2025-2028 unless otherwise noted.
|
What’s New |
Benefit |
Who It Helps |
|
Senior deduction |
Deduct an additional $6,000 per taxpayer age 65+ |
Retirees with modest income |
|
“No tax on tips” deduction |
Deduct up to $25,000 of tips from federal taxable income |
Employees who work in fields where tips are considered “ordinary” by the IRS |
|
Overtime deduction |
Deduct up to $25,000 of overtime pay |
Hourly workers with regular OT |
|
Car loan interest deduction |
Deduct interest up to $10,000 on auto loan interest for U.S.-assembled vehicles |
Car buyers who finance new autos purchased between 2025-2028 |
Each of these has income limits. High earners may phase out.
You can read more in our blog, Guidance On No Tax On Overtime & Tips.
Child Tax Credit Improvements
The Child Tax Credit remains intact and is expanded under the OBBB:
- $2,200 per qualifying child, starting in 2025
- $500 credit for other dependents
- Income phase-outs remain the same, $400,000 for married couples filing jointly and $200,000 for single filers
These changes are permanent.
Charitable Giving Adjustments
Previously, taxpayers who used the standard deduction were not allowed to deduct charitable contributions. Under the OBBB, there are two major shifts:
- Standard deduction filers (i.e., those who don’t itemize) can deduct up to $2,000 in cash gifts if married and filing jointly. Single or married filing separately taxpayers can deduct up to $1,000 of charitable contributions. This provision begins in the 2026 tax year and will not affect 2025 filers.
- Itemizers will see a reduction in charity deduction. Charitable gifts must exceed 0.5% of AGI before they generate a deduction.
Planning tip: 2025 may be a good year to accelerate gifts — or consider a donor-advised fund — before limitations kick in.
Expansions to 529 Plans
The OBBB broadens the list of qualified expenses. Under the new law, 529 funds can be used for:
- Books and curriculum materials
- Special tutoring
- Online education materials
- Vocational programs
- Professional licensure prep (CPA, bar exam, etc.)
- Higher limits for K-12 tuition starting in 2026 ($20,000)
All of this means taxpayers have more flexibility, and less chance of unused 529 plan funds.
Estate Tax Exemption Extended
The OBBB is considered a big win for families with estate planning needs.
The federal estate and gift tax exemption rises to $15 million per individual ($30 million for married couples) starting January 1, 2026. This exemption level is permanent and will be adjusted annually for inflation — providing long-term certainty for your tax planning.
What About Clean Energy Credits?
If you’ve been thinking about energy-efficient home upgrades, timing matters. Some clean energy credits are expiring sooner than originally planned.
Improvements like efficient windows, doors and HVAC are still available through 2025. Before investing in upgrades, ask your tax advisor if a credit is still available for your purchase.
On the other hand, clean vehicle and commercial credit phase-outs have already begun.
Key Changes for Business Taxpayers
Business Owners: Big Wins on the Depreciation Side
This is where the bill gets especially attractive for capital-intensive businesses. 100% bonus depreciation is back!
Originally intended to phase out, bonus depreciation is now restored to allow full expensing of qualifying equipment placed in service after January 19, 2025.
That means you can potentially deduct the full cost of equipment in the year you place it in service, resulting in major upfront tax savings.
New “Qualified Production Property” Classification
Manufacturers, here’s your moment: some real property used directly in U.S. production can now qualify for 100% expensing instead of depreciating over 39 years.
Under the OBBB, there’s more incentive to invest in U.S. facilities and operations.
You can read more in our blog, What the One Big Beautiful Bill Means for U.S. Manufacturers and Distributors.
Section 179 Expensing Expanded
Section 179 depreciation allows the full cost of qualifying assets in the year they were placed in service, with some limitations.
The OBBB increases the maximum deduction to $2.5 million and the property phase-out threshold to $4 million. This gives business owners a lot more planning flexibility.
QBI Deduction Made Permanent
Originally set to expire in 2025, the 20% Qualified Business Income (QBI) deduction is made permanent by the OBBB.
The new law also increases income limits for taxpayers claiming the QBI deduction — meaning more business owners will qualify.
Finally, starting in 2026, a minimum deduction of $400, indexed for inflation, is allowed for any business activity with QBI activity of $1,000 or more.
What Should You Be Doing Now?
Planning ahead will help avoid unpleasant surprises. Here are just a few steps to consider to ensure you’re taking full advantage of tax planning opportunities under the new OBBB.
- Evaluate year-end equipment purchases — timing matters
- Track employee meals separately — rules are tightening
- Plan charitable giving before new limitations hit
- If energy upgrades or clean vehicles are on your list, confirm credit availability first
- Meet with your tax advisor early, especially if your income fluctuates
👉 Watch the full webinar recording for deeper insights and examples that illustrate provisions of the new law.
Need Help?
The One Big Beautiful Bill is, well, big. This article touches on only a few key highlights of the new tax law. While not every change applies to everyone, many taxpayers — especially small business owners — have meaningful opportunities to reduce taxes with the right planning.
If you have questions about how these updates apply to you or your business, our team is happy to help.
Contact us online or call 800.899.4623.
