The Big Beautiful Bill: Tax Overhaul Summary & What You Need to Know

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) became law, ushering in one of the most sweeping tax code revisions since 2017. Tax Foundation+3TaxAct Blog+3Journal of Accountancy+3 While many provisions take effect in the 2025 tax year (i.e. for returns filed in spring 2026), the changes reshape the landscape for individuals, businesses, and long-term planning. Tax Foundation+3Baldwin CPAs+3TaxAct Blog+3

Below is a high-level rundown of the most consequential tax updates — and some of the planning implications you should keep on your radar.

Key Tax Changes in the Big Beautiful Bill

1. Extension & Permanence of Key TCJA Provisions

• Many of the individual tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire are now permanently extended (or extended for many years). TaxAct Blog+5Intuit Accountants+5Baldwin CPAs+5

• That includes the seven-bracket individual rate structure (10 % through 37 %) remaining intact instead of reverting to prior, higher rates. Intuit Accountants+4Baldwin CPAs+4Tax Foundation+4

• The higher standard deduction levels (nearly doubled under TCJA) continue. ENGAGE CPAS+3Intuit Accountants+3TaxAct Blog+3

2. Expanded & New Deductions for Wage Earners

• For tip income, the bill introduces an above-the-line deduction (so it applies even if you don’t itemize) for eligible tips (up to certain limits) for workers earning less than certain income thresholds. ENGAGE CPAS+3TaxAct Blog+3Tax Foundation+3

• For overtime pay, a similar deduction is added (subject to caps). ENGAGE CPAS+4TaxAct Blog+4Baldwin CPAs+4

• Interest on auto loans for U.S.-assembled vehicles may also be deductible (within limits). ENGAGE CPAS+3TaxAct Blog+3Baldwin CPAs+3

• Those aged 65+ receive a temporary boost in their standard deduction (an extra amount) for 2025–2028. Intuit Accountants+3TaxAct Blog+3Baldwin CPAs+3

3. State and Local Tax (SALT) Cap Changes

• The SALT deduction cap, long stuck at $10,000, is raised to $40,000 (for married couples) for taxpayers with AGI under $500,000. ENGAGE CPAS+3TaxAct Blog+3Tax Foundation+3

• Above that income threshold, the deduction phases downward, and after 2029, it is scheduled to revert back to $10,000 unless Congress acts. ENGAGE CPAS+3TaxAct Blog+3Tax Foundation+3

4. Business & Investment Tax Incentives

• The Qualified Business Income (QBI) deduction (20% pass-through deduction under Section 199A) is preserved and made permanent (no more sunset) under the new law. Tax Foundation+4gilpingivhan.com+4Baldwin CPAs+4

• Bonus depreciation (the ability to immediately deduct the full cost of certain capital investments) is restored to 100% and is now permanent. Tax Foundation+3Baldwin CPAs+3gilpingivhan.com+3

• The Section 179 expensing limit is raised (to $2.5 million) for qualified property. Baldwin CPAs+2Ryan & Wetmore+2

• The interest expense limitation is adjusted so that depreciation, amortization, and depletion are excluded from “adjusted taxable income” for purposes of the limit — giving more leeway for interest deductions. Ryan & Wetmore+2Tax Foundation+2

• The law also modifies rules for research & development (R&D) expensing, or at least gives more favorable options for small businesses. Tax Foundation+2Baldwin CPAs+2

5. Other Personal / Individual Adjustments & New Provisions

• The child tax credit is increased (from $2,000 to $2,200) and indexed for inflation. Baldwin CPAs+2ENGAGE CPAS+2

• A 1% excise tax on remittances (electronic transfers from the U.S. to foreign countries) is introduced, starting in 2026. ENGAGE CPAS+3Wikipedia+3Tax Foundation+3

• The thresholds for 1099 reporting are raised. For example, reporting via Form 1099-MISC / NEC moves from $600 to $2,000 starting in 2026. Wikipedia+2Tax Foundation+2

• Some clean energy and green tax credits from prior laws (e.g. under the Inflation Reduction Act) are reduced or repealed under the new legislation. Tax Foundation+2ENGAGE CPAS+2

• Changes to estate and gift tax planning: the bill retains a very high exemption threshold, and many fewer estates are expected to owe. Intuit Accountants+3Baldwin CPAs+3ENGAGE CPAS+3

• The law also tightens rules on executive compensation, particularly for public corporations (e.g. limits on deductibility for excess pay) in future years. Wikipedia+2Tax Foundation+2

What the Changes Mean — And What to Watch

Upsides & Opportunities

• More certainty & stability for long-term planning — many tax rules that were set to expire now stick around.

• Higher deductions for wage earners — people who rely on tipped income or overtime may see relief.

• Stronger investment incentives — with full bonus depreciation and better expensing, capital outlays become more tax efficient.

• Greater flexibility for business structuring — pass-through owners, especially in asset-heavy or capital-intensive businesses, benefit.
  

 Risks, Constraints & Caveats

• Some of the new deductions (tips, overtime, auto interest) have income thresholds or phase-outs.

• The expanded SALT deduction doesn’t help everyone — the benefit phases out at higher incomes, and after 2029, it reverts to prior limits unless extended.

• The repeal or shrinkage of green energy credits may affect those investing in solar, renewables, or energy-efficient property.

• The excise tax on remittances could affect individuals sending money abroad — it’s new territory and may have compliance complexity.

• Executive compensation changes and limitations could affect public companies’ pay structures.
  

 Planning Moves to Consider Now

• Revisit capital expenditure plans: investing in equipment, technology, or infrastructure could yield larger deductions under the new regime.

• For individuals in high-tax states, re-evaluate whether it makes sense to itemize or take standard deduction, considering the SALT cap changes.

• For those in service professions or with fluctuating income, model “before vs. after” tax outcomes under tips, overtime, and QBI rules.

• Review estate, gift, and wealth transfer plans, especially since exemption thresholds remain generous.

• Be ready for future revisions or guidance: IRS rules and implementing regulations will matter — the law’s framework is in place now, but details will evolve.