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What’s in the One Big Beautiful Bill (OBBBA)?

The “One Big Beautiful Bill Act” (OBBBA), signed into law by President Trump on July 4, 2025, has more than 100 provisions and over 500 pages that will impact the 2025 tax year and beyond. Some of these provisions are permanent, while others will expire as soon as 2028. Many of these deductions can be taken “above-the-line,” meaning they are available to taxpayers regardless of whether they itemize deductions or take the standard deduction. Many of the details of the bill are beyond the scope of a humble blog post, so please contact me with any questions and I would love to discuss with you.

INDIVIDUALS

  1. Permanent Tax Cuts: The OBBBA makes many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent, including individual income tax rates and brackets, and the increased standard deduction, which is $15,750 for single filers and $31,500 for joint filers in 2025.
    1. Tax Brackets for 2025:
    •  

Single filers

– 10%: Income up to $11,925

– 12%: Income between $11,926 and $48,475

– 22%: Income between $48,476 and $103,350

– 24%: Income between $103,351 and $197,300

– 32%: Income between $197,301 and $250,525

– 35%: Income between $250,526 and $626,350

– 37%: Income over $626,350

Married filing jointly or qualifying widow(er)

– 10%: Income up to $23,850

– 12%: Income between $23,851 and $96,950

– 22%: Income between $96,951 and $206,700

– 24%: Income between $206,701 and $394,600

– 32%: Income between $394,601 and $501,050

– 35%: Income between $501,051 and $751,600

– 37%: Income over $751,600

  1. Deductions for Tax on Tips and Overtime: 

– Tips: Up to $25,000 above-the-line in qualified tip income for employees in customarily tipped occupations (2025 through 2028).

– Overtime: Up to $12,500 above-the-line in qualified overtime pay (2025 through 2028).

  1. Car Loan Interest: Deduct up to $10,000 in interest on loans for personal-use vehicles built in the U.S. (2025 through 2028).
  1. Social Security Income: Individuals aged 65 and older (during tax years 2025 through 2028), can deduct up to $6,000 above-the-line for their social security income.
  1. State and Local Tax (SALT) Cap Adjustment: Increases the state and local tax (SALT) deduction cap to $40,000 for taxpayers earning under $500,000 from 2025-2029. Starting in 2030, this cap reverts to $10,000.
  1. Trump Accounts: New savings instrument with a $1,000 government-provided baby bonus for children born in the next four years (2025 through 2028), allowing tax-free contributions up to $5,000 a year until the beneficiary turns 18.
  1. Child Tax Credit: Boosts the doubled Child Tax Credit to $2,200 for more than 40 million families.
  1. Charitable Contributions:

The OBBBA creates a 0.5% of AGI floor for itemizers (eff. 2026) and permanently extends the 60% of AGI limit. If the taxpayer has other carryforwards during the tax year, disallowed amounts may be carried forward.

– Single taxpayers who do not itemize can still deduct up to $1,000 of charitable donations to valid charities, and up to $2,000 for married filers.

BUSINESSES

  1. 100% bonus depreciation can permanently be expensed for eligible business property permanent, and the bill also introduces “qualified production property” (new factories and manufacturing equipment). The new factories and equipment must be constructed after 1/19/25 and before 1/1/29, and placed in service by 12/31/30.
  1. Qualified Business Income (QBI): Permanently extends the 20% deduction for qualified business income for non-corporate taxpayers.
  1. Research and Development (R&D) expenses: Effective with the 2025 tax year, immediate expensing/deductibility is made permanent for domestic R&D costs, with the ability to deduct R&D capitalized after 2021 over a remaining period or 1 or 2 tax years.
  1. Section 179 Small Business Expensing Cap: Cap increased from $1 million to $2.5 million.
McGuinn CPA

(202) 540-0164

daniel@mcguinncpa.com