On May 22, 2025, the House of Representatives passed the tax-focused bill named the One Big Beautiful Bill Act (OBBBA). Days leading up to the vote had been contentious in long committee meetings, with dozens of amendments proposed and holdout concession discussions, but ultimately the bill moved forward along party lines (215-214), with Republicans losing just three votes.

The bill’s tax section is nearly 400 pages, containing several extensions and modifications to existing rules, as well as providing new provisions. Highlights include:

TCJA Extensions and Changes—Individual

• Permanent lower individual rates, increased standard deduction, repeal of personal exemptions
• Child tax credit increase to $2,500 (2025-2028), $2,000 made permanent thereafter
• Permanently increased AMT exemption and phase-out thresholds
• Permanently increased estate tax exemption + 2026 increase to $15M for single ($30M for MFJ)
• The SALT deduction is permanently increased to $40,000, with phaseout down to $10,000 for those making over $500,000. New limitations for businesses regarding PTET, specifically disallowing the workaround for specified service trades or businesses (SSTBs).
• Permanent above-the-line moving expenses limited to armed forces
• Permanent mortgage interest expense itemized deduction limitation ($750k debt limit)
• Permanent limitation of personal casualty losses (federally declared disaster related)
• Permanent repeal of miscellaneous itemized deductions
• Pease itemized deduction limitation repealed and replaced with a new overall limitation for top earners

TCJA Extensions and Changes—Business

• QBI deduction made permanent and increased to 23%
• Modifications to §199A that would allow SSTBs a deduction even if taxable income exceeds threshold 
• Full immediate research expensing for 2025+ with retroactive option back to 2022+ for “smaller” taxpayer
• Reinstatement of 100% bonus depreciation for assets PIS on or after 1/20/25 (Trump inauguration day)
• Renewal and enhancement of Opportunity Zones
• Business interest expense limitation calculations will again use EBITDA instead of EBIT
• Excess business loss limitation made permanent, and changes apply to carryforward calculation
• Extension of lower international rates (FDII, GILTI, BEAT), with slight modifications

President Trump Proposals

• No tax on certain tips for tax years 2025–2028 (AGI and other limitations apply)
• No tax on certain overtime pay for tax years 2025–2028 (AGI and other limitations apply)
• A new $4,000 deduction for seniors with Social Security income for tax years 2025–2028 (AGI limitations apply)
• No tax on up to $10,000 of domestic car loan interest
• New deduction for accelerated factory depreciation

Other—Revenue Raisers

• Repeal of many Inflation Reduction Act (IRA) clean energy incentives
• Early end to the Employee Retention Credit (ERC) of Jan. 31, 2024 (no claim filed after that date will be processed for potential refund)
• Affordable Care Act (ACA) rollbacks, including allowing the Premium Tax Credit to expire
• College and university provisions, including expansion of UBIT and increased endowment fund tax

Other

• Increased §179 expensing  to $2.5 million with a $4 million threshold
• Form 1099-K reporting back to $20,000/200 threshold (reverses ARPA legislation that lowered)
• Form 1099 reporting threshold increased from $600 to $2,000 and indexed for inflation
• 1% floor on deduction of charitable contributions made by corporations
• Reinstatement of the $150/$300 above-the-line charitable contribution deduction
• Extension and enhancement of the paid family and medical leave credit and employer-provided childcare credit

Most changes are prospective for 2025 forward, but a few are retroactive. The bill has an estimated cost of over $3 trillion. 

The bill now heads to the Senate, where several changes are expected to items including Medicaid, clean energy incentives, state and local tax deductions, and making permanent temporary provisions like research expensing. The two chambers will hash out differences via conference committee or an exchange of amendments. Enactment of the agreed-upon bill is still aimed for July 4. The bill would increase the national debt limit by $4 trillion.

Please reach out with questions. We will continue to keep you updated as progress is made or changes occur.

Published: 05/27/2025

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