The One Big Beautiful Bill Act (OBBBA): What Does it Mean to You?
In July 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, representing the most sweeping changes to U.S. tax, estate, and fiscal policy in years. Whether you’re an individual taxpayer, a business owner, or a family with estate planning needs, this law introduces new opportunities (and a few new challenges) that are important to understand as you look ahead.
Below, we summarize the most significant permanent and long-term provisions affecting individuals and business owners, so you can make informed planning decisions.
1. Permanent Individual Tax Rates
Tax rates for individuals, originally set by the 2017 Tax Cuts and Jobs Act, are now locked in permanently. You’ll continue to see the same seven tax brackets (10% to 37%) for all future years. For most families and individuals, this brings stability to tax planning, retirement forecasting, and income strategies, allowing greater confidence in long-term projections.
(Source: CBO analysis, July 2025)
2. Expanded, Permanent Standard Deduction
The standard deduction is now much higher and will increase with inflation: $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers. With a larger automatic deduction, more families will find it simpler and more beneficial to forgo detailed itemizing, streamlining annual tax filing.
(Source: Tax Policy Center, July 2025)
3. Qualified Business Income Deduction (QBI) Made Permanent
Owners of pass-through businesses, like S-corps, partnerships, and many LLCs, can continue to deduct 20% of qualifying business income every year. The income thresholds for phasing out this deduction have been adjusted upward and will track inflation, making this benefit accessible to a wider range of business owners and providing significant, long-term tax relief that can free up capital for reinvestment.
(Source: Joint Committee on Taxation, July 2025)
4. Business Investment Expensing and Depreciation
Businesses can now immediately deduct the full cost of qualifying new equipment, property, or machinery placed in service (bonus depreciation) through at least 2029. The Section 179 limit also increases to $2.5 million. This is especially valuable for manufacturers and companies making large or frequent investments, facilitating faster growth and improved cash flow.
(Source: Congressional Research Service, July 2025)
5. Expanded Estate and Gift Tax Exemption
The federal estate and lifetime gift tax exemption jumps to $15 million per person ($30 million per couple), indexed for inflation, and is now permanent. This should drastically reduce the need for complex estate tax planning for most families, and allows greater flexibility in lifetime wealth transfers, trust setups, and generational planning.
(Source: Tax Policy Center, July 2025)
6. New Charitable Deduction for Non-Itemizers
Taxpayers who do not itemize can now claim a “above-the-line” deduction of up to $1,000 ($2,000 for couples) annually for cash donations to qualified charities. This applies to most Americans. Itemizers face a new minimum threshold for deductibility, but overall, more households can now benefit from charitable giving incentives.
(Source: IRS updates and CBO brief, July 2025)
7. Higher Child Tax Credit
The child tax credit rises to $2,200 per child (up from $2,000), and will be adjusted for inflation moving forward. Income thresholds for phasing out remain ($200,000 for singles, $400,000 for joint filers), so most middle- and upper-middle-income families can count on a slightly larger refund or tax savings for each qualifying child.
(Source: Tax Policy Center, July 2025)
8. SALT Deduction Expansion (Temporary)
Through 2029, the cap on deducting state and local taxes (SALT) increases to $40,000. This will significantly benefit taxpayers in states with high income or property taxes. This change is temporary (the cap returns to $10,000 in 2030) so planning to maximize deductions during this period is advisable for high earners in affected states.
(Source: CBO and Tax Foundation, July 2025)
9. Additional Deduction for Seniors (Temporary)
For tax years 2025–2029, those aged 65 and older receive an extra $6,000 deduction in addition to existing senior and standard deductions. This move effectively shields more retirement income from federal tax for many retirees.
(Source: Council of Economic Advisers, July 2025)
10. Clean Energy Tax Credits Phased Out
Federal credits for electric vehicles, solar roof and panel installations, and most major energy-efficient home upgrades are repealed after 2025–2026. If you’re considering any of these investments, the window to lock in significant federal tax savings is closing soon.
(Source: IRS, July 2025)
11. Cuts to Social Programs (Medicaid, SNAP, etc.)
The law enacts substantial reductions in federal spending on Medicaid, the Children’s Health Insurance Program, and SNAP food assistance. There will be more eligibility requirements to enter or remain in these programs moving forward. This is important to note for those with family or employees potentially impacted by stricter rules or reduced benefits.
(Source: CBO, July 2025)
What Does This Mean for You?
The OBBBA delivers lasting tax benefits for business owners, affluent families, and many retirees. It also offers select, but time-limited, advantages for families with children and those in high-tax states. At the same time, it reduces incentives for clean energy upgrades and narrows eligibility for important social programs.
Given these changes, now is an ideal time to review your tax strategies, estate plans, and business decisions with your advisor:
- Families and high-net-worth individuals should revisit estate strategies to take advantage of the higher exemptions.
- Business owners may want to accelerate investments in property and equipment.
- Homeowners and car buyers considering green upgrades should act soon to use expiring credits.
- Seniors and families can explore how new and expanded deductions affect their annual tax situation.
As always, every financial situation is unique. We recommend working with your advisor to tailor a plan to your individual goals and take full advantage of the new law’s opportunities.
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This summary is based on July 2025 analyses from the Congressional Budget Office, Tax Policy Center, IRS, and other major policy and tax research organizations. For more details or guidance specific to your needs, please reach out for a personalized review.