On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law, encompassing nearly 900 pages of sweeping reforms across tax, healthcare, energy, and other areas. For individuals, families, and business owners, the Act introduces a blend of permanent, temporary, and phased-in provisions that create new planning opportunities and important considerations.
It’s important to note that even permanent provisions under the OBBBA may still be altered or repealed through future legislation.
Key Highlights for Investors and Business Owners
Effective for the 2025 Tax Year:
- Standard Deduction Increases: Now permanent and adjusted annually for inflation $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly.
- SALT Deduction: Temporarily increased to $40,000, but begins to phase out at $500,000 in MAGI and reverts to $10,000 by 2030. The deduction is reduced by 30% of MAGI over $500,000 (for both single and married taxpayers), but the deduction cannot be less than $10,000.
- Senior Exemption: A new $6,000 deduction for those age 65 and older that can be claimed until 2028. The deduction is phased out for single taxpayers with MAGI over $75,000 and married taxpayers filing jointly with MAGI over $150,000. While it has been portrayed as eliminating taxes on Social Security benefits, it will have a minimal impact on middle and high-income claimants.
- Deductions for Tips & Overtime: Temporary above-the-line deduction for tips ($25,000 for qualified tips) and overtime pay ($12,500 for single taxpayers / $25,000 for married taxpayers filing jointly). Both deductions phase out based on your MAGI and will be eliminated in 2029.
- Child Tax Credit Enhancements: The partially non-refundable tax credit increased to $2,200 per child, $1,400 refundable part of the credit is made permanent, and the $500 non-refundable credit for dependents other than qualifying children is also made permanent. All adjusted for inflation for later years.
- 529 Plan Flexibility: Expanded qualified expenses, including credentialing and private educational resources.
For Business Owners:
- Bonus Depreciation Returns to 100% for property acquired and placed in service on or after January 19, 2025.
- Increased Section 179 Expensing: Now up to $2.5 million per year. If the cost of qualifying property exceeds $4 million, the deduction is reduced by the excess amount.
- Full Expensing for U.S. R&D: Immediate deduction permitted for domestic research.
- Qualified Small Business Stock (QSBS): Enhanced tiered exclusion system with increased thresholds. For stock acquired after July 4, 2025 – 50% exclusion from income for stock held at least 3 years, 75% for stock held for at least 4 years, and 100% if the stock was held for 5 years or more.
What This Means for You
While some provisions apply immediately for the 2025 tax year, others begin phasing in starting in 2026, and some include sunset dates. These changes present new planning opportunities, especially for high-net-worth individuals, families, and business owners looking to optimize their tax and estate strategies in a shifting policy environment.
We recommend a proactive review of your financial plan in partnership with your tax advisor to evaluate how these updates may impact your overall strategy.
As always, our team is here to guide you forward with clarity, insight, and confidence.
This material has been provided for general information purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult with your tax preparer, professional tax advisor, or lawyer.