The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025 and brought nearly 1,000 pages of significant federal tax policy changes as well as a few key shifts in spending. The impacts of the bill reach across individuals, business, and a wide swath of industry sectors, with complex legislation in both permanent and temporary provisions.
Because of the OBBBA’s complexity, financial and legal advisors are still unpacking all of the changes and their potential impacts. However, here are 10 of the bigger takeaways that taxpayers and businesses should pay attention to:
1 – Temporary Deductions for Tip Income, Overtime Pay, and Auto Loan Interest through 2028
New temporary deductions (often referred to as “above-the-line” deductions) for qualified tip income up to $25,000 annually. Overtime compensation deductions extend up to $12,500 annually for individual filers and $25,000 for joint filers. And auto loan interest for U.S.-assembled vehicles can be deducted up to $10,000.
These provisions are in effect starting in the 2025 tax year through 2028.
2 – Significant Cuts to Medicaid and SNAP (Food Stamps)
The OBBBA introduces substantial reductions in government spending, notably in social safety net programs such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP). The Medicaid cuts are anticipated to increase the number of uninsured in the population, while the SNAP program will enforce more strict work and overall eligibility requirements.
3 – Increased Estate and Gift Tax Exemptions
Estate and Gift Tax exemptions have been permanently increased to $15 million per individual, effectively $30 million for married couples, effective in 2026. Effective in 2027, the increased exemption amounts will be indexed for inflation, with 2025 as the base year for adjustments.
Additionally, the OBBBA continues with the portability provision, meaning that a surviving spouse can utilize any unused estate tax exemption from their deceased spouse.
4 – Temporary Increase in SALT Deduction Cap
Starting in the 2025 tax year, the federal deduction cap for State and Local Taxes (SALT) temporarily increases from $10,000 to $40,000 for married couples (from $5,000 to $20,000 for individuals). There are phase-outs for higher earners, and the temporary cap reverts back after 2030.
5 – Permanent Extension of Individual Tax Rate Reductions
The reduced individual income tax rates and brackets set forth by the 2017 Tax Cuts and Jobs Act (TCJA) have been made permanent. (These were set to expire at the end of 2025.)
6 – Permanent Extension of Increased Standard Deduction
The increased standard deduction amounts introduced in the TCJA have also been made permanent, helping more taxpayers benefit from the standard deduction rather than itemizing.
7 – Permanent 100% Bonus Depreciation
The OBBBA restores the 100% bonus depreciation for qualifying short-lived business investments permanently. This allows businesses to immediately expense the full cost of any eligible assets, and is projected to boost capital investments.
8 – Permanent Immediate Expensing for Domestic R&D Expenses
Also made permanent is the ability for eligible businesses to expense their domestic research and development (R&D) costs, instead of amortizing them over a period of several years. This is anticipated to help boost innovation across industries, by spurring more businesses to invest in R&D efforts.
9 – Elimination/Phase-out of Many Clean Energy Tax Credits
Green energy will take a hit with significant changes to tax credits. Residential solar installations, electric vehicles, and some commercial wind and solar project tax incentives will be phased out or terminated ahead of their previous schedules. The Bill also adds New Foreign Entity of Concern (FEOC) restrictions to the remaining credits and incentives.
10 – Permanent Qualified Business Income (QBI) Deduction (Section 199A):
The OBBBA makes permanent the 20% deduction for qualified business income (QBI) from pass-through entities such as S corporations, partnerships, sole proprietorships – providing more stability and tax relief for business owners. (This was previously set to expire.) Phase-in ranges were adjusted, and a minimum deduction for those with at least $1,000 of QBI was introduced.
Curious about the impacts of the OBBBA on your business or organization? The experienced attorneys at Hackstaff, Snow, Atkinson, & Griess can help. Contact us today for a free consultation.
