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One Big Beautiful Bill Act: Key Provisions and What They Mean for You

By: Aldrich Advisors

On July 3, 2025, the U.S. House passed the One Big Beautiful Bill Act (OBBBA) by a 218-214 vote following an all-night session. This follows the Senate’s passage of the legislation on July 1, and the bill is expected to be signed into law by President Trump on July 4.

The bill contains approximately $4.5 trillion in tax cuts over ten years through reductions in corporate and individual income taxes and various other related tax changes. It is expected to add more than $3 trillion to the federal deficit. To offset a portion of this cost, the bill contains $3.5 trillion in spending cuts, largely targeting federal social programs. 

This legislation spans 900 pages, and Aldrich will continue to monitor developments and provide timely updates as more details emerge. 

Individual Tax Provisions

For individuals, the bill includes a range of tax relief measures aimed at middle- and upper-income households. The key provisions include:

  • Tax Rates and Brackets: The 2017 Tax Cuts and Jobs Act (TCJA) rates are made permanent, with additional inflation adjustments for certain brackets.  
  • SALT Deduction Cap: Temporarily increased to $40,000 through 2029, then reverts to $10,000 in 2030. A phase-down applies for taxpayers with modified adjusted gross income (MAGI) over $500,000.  
  • Tips and Overtime: Introduces deductions for tip income (up to $25,000) and overtime pay (up to $12,500), both phased out for higher-income earners.  
  • Standard Deduction: Permanently increased to $15,750 (single), $23,625 (head of household), and $31,500 (married filing jointly), adjusted for inflation.  
  • Senior Deduction: Introduces a $6,000 deduction for individuals aged 65 and older, with phase-outs starting at $75,000 MAGI ($150,000 for joint filers).  
  • Child Tax Credit: Increased to $2,200 per child, indexed for inflation.  
  • Estate and Gift Tax Exemption: Permanently increased to $15 million for single filers ($30 million for married couples), adjusted for inflation.  

Private Company Provisions

For private companies and their owners, the OBBBA legislation offers a suite of provisions intended to stimulate investment, innovation, and domestic production. Key aspects of the bill include: 

  • Pass-Through Deduction (Section 199A): Made permanent, with expanded phase-in ranges for specified service trades or businesses (SSTBs).  
  • Bonus Depreciation: 100% bonus depreciation made permanent.  
  • Section 179 Expensing: Increased limit to $2.5 million, with a phase-out threshold at $4 million, both indexed for inflation.  
  • Research and Development (R&D) Deduction: Full expensing for domestic R&D expenditures made permanent under new Section 174A. 
  • Business Interest Limitation: Reverts to an EBITDA-based limitation, made permanent.  
  • SALT Workarounds for Pass-Throughs: Preserves the use of pass-through entity taxes (PTETs) for all pass-through entities.  
  • Incentives for Small Manufacturers and Domestic Production: Introduces a 100% depreciation for qualified production property and increases the advanced manufacturing investment credit rate from 25% to 35%. 
  • Business Loss Carryforwards: Disallows the conversion of excess business losses to net operating losses (NOLs), making the limitation permanent.  
  • Employee Retention Credit (ERC) Enforcement Measures: Imposes due diligence requirements for ERC promoters, with penalties for non-compliance, and prevents the IRS from issuing additional unpaid claims unless filed by January 31, 2024.  

Side-by-Side Comparison: Current Law vs. OBBBA

The chart below compares current law to the OBBBA legislation that has passed the House and Senate.

Comparison: Individual Tax Provisions 

Provision 

Current Law 

OBBBA 

Tax Rates and Brackets 

TCJA rates expire after 2025  

Makes TCJA rates permanent with inflation indexing  

SALT Deduction Cap 

$10,000 cap  

Raises to $40,000 (2025–2029); reverts with phase-down for high earners  

Tips Income Deduction 

Taxable  

Deductible up to $25,000 per return through 2028; phased out based on income  

Overtime Income Deduction 

Taxable  

Deductible up to $12,500 for single and $25,000 for joint filer, through 2028; phased out based on income  

Standard Deduction 

$15,000 (single), $30,000 (MFJ)  

Permanently increased to $15,750 (single), $31,500 (MFJ) w/ inflation adjustments  

Senior Deduction 

Additional standard deduction for 65+ 

Adds $6,000 deduction for individuals aged 65+; phased out at higher incomes  

Itemized Deduction Limitation 

No limitation  

Limits the benefit at $0.35 per dollar  

Child Tax Credit 

$2,000 per child  

Permanent $2,200 per child; indexed for inflation  

Estate & Gift Tax Exemption 

$13.61M (2024)  

Raised to $15M with inflation adjustment 

Comparison: Business Tax Provisions 

Provision 

Current Law 

OBBBA 

Pass-Through Deduction (199A) 

Expires after 2025  

Made permanent with no changes besides increased availability for certain small businesses  

Bonus Depreciation 

Phasing down to 40% in 2025  

100% bonus depreciation made permanent  

Section 179 Expensing 

$1.22M limit; $3.04M phaseout (2024)  

Increased to $2.5M; phaseout at $4M

R&D Deduction 

5-year amortization  

Full expensing for domestic R&D made permanent under Section 174A with acceleration available for some previously capitalized costs  

Business Interest Limitation 

EBIT-based  

Reverts to EBITDA-based permanently  

SALT Workarounds for Pass-Throughs 

PTETs allowed  

Preserves PTETs for all pass-through entities  

Production Real Property Incentives 

Generally depreciated over 39 years  

Introduces 100% expensing for certain real property used in manufacturing

Business Loss Carryforwards 

Convert to NOLs  

Made permanent. Expanded to estates and trusts.    

Section 1202 

5 year holding period for exclusion  

Provides new incentives for three and four year holding periods and expands eligibility and the amount of gain that can be excluded   

ERC Enforcement 

Open claims processing  

Introduces promoter due diligence rules plus cutoff for unpaid ERC claims filed after Jan 31, 2024  

Updates Directly to Your Inbox

Aldrich CPAs + Advisors LLP is closely monitoring this legislation and its implications for both private companies and individuals. Sign up for Aldrich Insights below to get the latest updates sent directly to you or visit our Legislative + Regulatory page

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