The One Big Beautiful Bill Act of 2025 (OBBBA) is a comprehensive tax reform law that builds on and makes permanent many provisions from the 2017 Tax Cuts and Jobs Act. Listed below are major relevant changes brought by OBBBA:
How are Individuals Affected?
- The base standard deduction has permanently increased to $15,750 for single filers, $23,625 for individuals filing as head of household, and $31,500 for married individuals filing jointly, annually adjusted for inflation.
- Senior taxpayers aged 65+ benefit from a $6,000 per individual bonus deduction, which begins to phase out at an income of $75,000 (single) and $150,000 (MFJ), applicable through 2028.
- SALT (State and Local Tax) Deduction cap has temporarily increased to $40,000 ($20,000 filing separately), increasing by 1% annually through Modified Adjusted Gross Income (MAGI) Phaseouts begin at$500,000 (MFJ) and $250,000 (filing separately) The deduction is not to fall below $10,000 regardless of income level.
- The child tax credit has increased to $2,200 per qualifying child, annually adjusted for
- Individuals with Telehealth, Bronze or Catastrophic Exchange plans, and Direct Primary Care arrangements can now contribute 1D
- Taxpayers can now deduct up to $10,000 in interest on loans for American-made vehicles, through 2028
- Trump Accounts – tax advantaged savings accounts for children, allowing annual contributions of up to $5,000. For children born between 2025 and 2028, a government-funded deposit of $1,000 will be received at the accounts opening.
How are Businesses Affected?
- The 20% deduction for Qualified Business Income (QBI) is now permanent, with higher phaseouts beginning at $75,000 (single) and $150,000 (MFJ).
- Businesses can immediately deduct up to $2.5M in qualified equipment purchases, with the deduction phasing out completely at$6.5M. Additionally, 100% first-year bonus depreciation is now permanently available for assets placed in service after January 19,
- Domestic research and development expenses are fully and immediately.
Investment Opportunities
- Exemption cap for Qualified Small Business Stock (QSBS) has increased to $15M, adjusted for inflation, with the minimum holding period reduced to 3 years. To qualify, businesses must now have gross assets of less than $75M.
- Opportunity Zones (OZs) may be redesignated every 10 Taxes on capital gains from investments made after December 2026 can be deferred for 5 years, with a 10% step up in basis at the end of the period. Additional reporting and compliance standards ha1.e been defined.
Estate & Gift Tax
- Federal Unified Estate, Gift, and GST Tax Exemption has permanently increased to $15M per individual ($30M for a married couple), indexed for inflation.
- Itemized Charitable Contributions will be reduced by 5% of AGI, with tax benefits capped at 35% of the contribution amount.
- Non-itemizers can deduct up to $1,000 (single) and $2,000 (MFJ) for eligible cash donations must be made to qualified public These limits are not indexed for inflation.
For any additional questions or inquiries, please feel free to reach out to your SFMG team.
This is for informational purposes and is not meant to be construed as investment or tax advice. Although we make every effort to be accurate in our content, the data is derived from other and should be reviewed carefully. While we believe these sources to be reliable, we cannot guarantee their validity. SFMG is not a CPA firm and does not provide tax advice. You should consult with a financial professional before making any decisions. Each individual will have different needs and outcomes based on their unique financial situation.