The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025. In this resource, we summarize and provide insights into select tax provisions of the act. Our professionals are ready to help you model the effects of these provisions on your personal tax situation and estate plan. Contact us to learn more.
| Tax Type | Effective Date | Provision | Comments |
|---|---|---|---|
| Top OBBBA Tax Provisions Taxpayers Need to Know | |||
| Estate & Gift | Taxable years beginning after 12/31/2025 | Extension and Enhancement of Increased Estate and Gift Tax Exemption Amounts | The act makes permanent a $15 million unified estate and gift tax exemption and the generation-skipping transfer tax exemption, which will be inflation indexed. Insights from Forvis Mazars: The increased and permanent exemption provides an opportunity to review existing gift and estate plans. |
| Individual | Taxable years beginning after 12/31/2025 | Extension and Enhancement of Reduced Rates | The act makes the Tax Cuts and Jobs Act of 2017 (TCJA) reduced income tax rates permanent with modifications to the inflation adjustments. |
| Individual | Taxable years beginning after 12/31/2024 | Extension and Enhancement of Increased Standard Deduction | The act provides a permanent increase to the standard deduction. For tax years beginning after 2024, the standard deduction would permanently increase to $31,500 for married individuals filing jointly, $23,625 for head of household, and $15,750 for all others. |
| Individual | Taxable years beginning after 12/31/2024 | Termination of Deduction for Personal Exemptions Other Than Temporary Senior Deduction | The act makes permanent the elimination of personal exemptions. |
| Individual | Calendar years beginning after 12/31/2024 | Enhanced Deduction for Seniors | A temporary deduction for seniors aged 65 or older of $6,000 has been added in addition to the standard deduction or itemized deductions. The deduction phases out when modified adjusted gross income (MAGI) exceeds $75,000 or $150,000 in the case of a joint return. The deduction is available for tax years 2025 through 2028. Insights from Forvis Mazars: This follows through on President Trump’s campaign promise of “no tax on Social Security.” Certain rules prevented alterations to Social Security; therefore, an additional deduction was implemented for seniors. |
| Individual | Taxable years beginning after 12/31/2025 | Termination of Miscellaneous Itemized Deductions Other Than Educator Expenses | The act permanently repeals miscellaneous itemized deductions. Eligible educator expenses would no longer be considered a miscellaneous itemized deduction and, therefore, would be eligible as an itemized deduction. |
| Tax Type | Effective Date | Provision | Comments |
|---|---|---|---|
| Individual | Taxable years beginning after 12/31/2025 | Limitation on Tax Benefit of Itemized Deductions | The act reduces the benefit of itemized deductions for taxpayers in the 37% rate bracket, capping the benefit of such deductions at 35%. It also permanently repeals the Pease limitation, an overall limitation on itemized deductions which was temporarily suspended by the TCJA. Insights from Forvis Mazars: This provision begins after the 2025 tax year. Therefore, taxpayers may consider accelerating itemized deductions from 2026 to 2025 before the limitation takes effect. |
| Individual | Taxable years beginning after 12/31/2025 | 0.5% Floor on Deduction of Contributions Made by Individuals | The act introduces a 0.5% floor for those taxpayers who are itemizing and claiming a deduction for charitable contributions. Insights from Forvis Mazars: By “bunching” charitable contributions into fewer tax years, the impact of the floor will lessen per dollar contributed. When combined with the capping of itemized deductions at 35% noted above, taxpayers may consider accelerating 2026 charitable donations to 2025. |
| Individual | Taxable years beginning after 12/31/2024 | State and Local Tax (SALT) Deduction Limitation Adjustment | The act has been amended to raise the SALT cap to $40,000 for most taxpayers for 2025. In the years 2026 through 2029, the cap increases by 1% per year. In 2030 and thereafter, it reverts to $10,000. It also contains phaseouts for those with MAGI above $500,000 (30% reduction to the extent that MAGI exceeds $500,000, with a $10,000 floor) in 2025. This $500,000 threshold increases by 1% per year from 2026 through 2029 until the reversion to the $10,000 cap in 2030. Insights from Forvis Mazars: For owners of pass-through entities (PTEs) such as partnerships and S corporations, the availability in certain states to pay SALT at the PTE level and deduct the expense for federal income tax purposes was not affected. Therefore, this opportunity still exists to potentially increase SALT deductions otherwise limited using this, commonly referred to pass-through entity tax (PTET) strategy. |
| Individual | Taxable years beginning after 12/31/2025 | Permanent and Expanded Reinstatement of Partial Deduction for Charitable Contributions of Individuals Who Do Not Elect to Itemize | The act reinstates the charitable contribution deduction for those who do not itemize as an above-the-line deduction. The maximum deduction is $1,000 ($2,000 joint return). |
| Individual | Taxable years beginning after 12/31/2025 | Extension of Deduction for Qualified Business Income and Permanent Enhancement | The act makes the 20% qualified business income (QBI) deduction (Section 199A) permanent with changes to the phase-in amounts. |
| Tax Type | Effective Date | Provision | Comments |
|---|---|---|---|
| Individual | Taxable years beginning after 12/31/2025 | Extension and Modification of Limitation on Deduction for Qualified Residence Interest | The act makes permanent the $750,000 ($375,000 for those married filing separately) acquisition indebtedness limitation and the exclusion of interest on home equity indebtedness from the definition of qualified residence interest but expands the definition of qualified residence interest to include mortgage insurance premiums on acquisition indebtedness. |
| Individual | Taxable years beginning after 12/31/2024 | Extension and Enhancement of Increased Child Tax Credit | The act makes the child tax credit permanent, increases it to $2,200 beginning in tax year 2025, and indexes the credit inflation. The refundable portion, $1,700 in 2025, is also made permanent and adjusted for inflation. In addition, it makes permanent income phaseout thresholds of $400,000 (joint filers) and $200,000 (all others), and the $500 credit for each dependent other than a qualifying child. |
| Individual | Taxable years beginning after 12/31/2025 | Extension of Rollovers From Qualified Tuition Programs to ABLE Accounts Permitted | The act makes permanent, given certain requirements, the ability for rollovers from qualified tuition programs to ABLE accounts to be nontaxable. |
| Individual | Taxable years beginning after 12/31/2025 | Trump Accounts | This provision establishes a tax-preferred savings account for the exclusive benefit of an individual who must not have attained age 18 before the end of the calendar year the account is established. After-tax contributions to the account can be made starting July 4, 2026, and are limited to $5,000 per year, adjusted for inflation starting in tax years after 2027. Distributions are not allowed until the calendar year the beneficiary attains age 18. In general, these accounts will be treated like individual retirement accounts. Insights from Forvis Mazars: Children born in 2025 through 2028 who are U.S. citizens will be automatically enrolled, if elected by the parent, and receive a one-time deposit of $1,000 from the federal government. Others can also contribute to the account, with the $5,000 limitation noted, and the account will grow tax-deferred until withdrawals are made. This is another vehicle to consider for tax-deferred savings for children, including for college or a first-home purchase. |
| Individual | Stock acquired after enactment of the Act | Section 1202 Exclusion: Qualified Small Business Stock (QSBS) | For stock issued after the enactment of the act, the $50 million company asset threshold is increased to $75 million (indexed for inflation beginning in 2027). In addition, a new tiered exclusion for holding periods applies, allowing a 50% exclusion after three years, 75% after four years, and 100% after five years. The annual gain exclusion is the greater of $10 million reduced by prior gains or 10 times the aggregate basis of stock disposed. The $10 million threshold would be raised to $15 million for stock acquired after the date of enactment. |
| Tax Type | Effective Date | Provision | Comments |
|---|---|---|---|
| Business | Property acquired after 1/19/2025 | Bonus Depreciation | The act makes 100% bonus depreciation permanent. It also allows taxpayers to elect to take a reduced bonus depreciation rate of 40% or 60% depending on the type of property in the first taxable year ending after January 19, 2025. Insights from Forvis Mazars: Be wary of the “binding contract” rules. If such a contract to purchase assets existed before the applicable date, they may not be eligible. |
| Business | Property placed in service in taxable years beginning after 12/31/2024 | Increase in Maximum and Phaseout Values for Section 179 Property | The act increases the maximum amount that a taxpayer may expense under Section 179 from $1.25 million to $2.5 million. The deduction prior to the OBBBA begins to phase out when total purchases exceed $3.13 million of purchases. This would be raised to $4 million and indexed for inflation for tax years after 2025. |
| Business | Calendar years beginning after 12/31/2025 | Increase in Threshold for Requiring Information Reporting With Respect to Certain Payees | The reporting threshold is increased for services performed by an independent contractor and certain other payments that are generally reported on Form 1099-MISC or Form 1099-NEC from $600 to $2,000 (per calendar year) with inflation indexing beginning in 2027. |
| Other Select Provisions | |||
| Individual | Taxable years beginning after 12/31/2024 | No Tax on Tips | The act provides individuals with a federal income tax deduction of up to $25,000 for “qualified tips,” which are defined as tips received voluntarily by individuals working in an occupation that “traditionally and customarily” received tips on or before 12/31/2024. The new law does mention several of these occupations and instructs the Secretary of the Treasury to publish a complete listing. The deduction is subject to a phaseout beginning with a MAGI of $150,000 ($300,000 for joint filers). To be eligible for the deduction, the amounts must be reported via Forms W-2, 1099-K, 1099-NEC, or 4137. Further, the deduction does not apply to amounts received for services on behalf of specified services, as defined in Internal Revenue Code (IRC) §199A(d)(2), e.g., health, law, consulting, etc. The deduction is available for 2025 through 2028 taxable years. |
| Individual | Taxable years beginning after 12/31/2024 | No Tax on Overtime | The act provides individuals with a federal income tax deduction of up to $25,000 for those married filing jointly and $12,500 for all others for “qualified overtime,” which is defined as overtime compensation paid to an individual required under Section 7 of the Fair Labor Standards Act of 1938 that is more than the regular rate at which such an individual is employed. Qualified overtime does not include qualified tips. The deduction is subject to a phaseout beginning with a MAGI of $150,000 ($300,000 for joint filers). The deduction is available for 2025 through 2028 taxable years. |
| Tax Type | Effective Date | Provision | Comments |
|---|---|---|---|
| Individual | Indebtedness incurred after 12/31/2024 | No Tax on Car Loan Interest | The act provides for taxable years beginning in 2025 through 2028, a non-itemized deduction for qualified vehicle loan interest. The proposal limits the deduction to $10,000 and is ratably reduced when a taxpayer’s MAGI exceeds $100,000 or $200,000 for those married filing jointly. Final assembly of the vehicle must occur in the United States. Lenders are required to do information reporting on the interest. |
| Individual | Taxable years beginning after 12/31/2025 | Extension and Modification of Limitation on Wagering Losses | The act makes permanent the TCJA’s disallowance of deductions for losses from wagering transactions in excess of winnings, originally set to expire on 12/31/2025. In addition, the loss deduction is limited to 90% of losses incurred. |
| Individual | Taxable years beginning after 12/31/2025 | Extension of Limitation on Casualty Loss Deduction | The TCJA modified the deduction for casualty losses of individuals to limit the deduction to amounts in excess of 10% of adjusted gross income. The act makes this limitation permanent and expands qualifying casualty disasters to include state declared disasters |
| Individual | Taxable years beginning after 12/31/2025 | Extension and Modification of Qualified Transportation Fringe Benefits | The act makes permanent the TCJA's suspension of the “qualified bicycle commuting reimbursements” income exclusion, originally set to expire on 12/31/2025. |
| Individual | Taxable years beginning after 12/31/2025 | Extension and Modification of Limitation on Deduction and Exclusion for Moving Expenses | The act makes permanent the TCJA's suspension of the “qualified moving expense reimbursement” income exclusion, except for certain members of the Armed Forces, originally set to expire on 12/31/2025. |
| Individual | Contributions after 12/31/2025, modified inflation adjustment for taxable years beginning after 12/31/2025 | Extension of Increased Limitation on Contributions to ABLE Accounts and Permanent Enhancement | The act makes permanent certain provisions regarding the amount of contribution allowed by designated employee beneficiaries. Maximum annual contributions would be indexed for inflation. |
| Individual | Taxable years ending after 12/31/2025 | Extension of Savers Credit Allowed for ABLE Contributions | The act makes permanent ABLE account contributions made by the designated beneficiary as eligible contributions for purposes of the saver’s credit. |
| Individual | Tax years beginning after 12/31/2024 | Limitation on Excess Business Losses of Noncorporate Taxpayers | The act makes the §461(l) limitation on the deduction of excess business losses permanent. Insights from Forvis Mazars: Losses generated from pass-through businesses may be limited when offsetting other income. Such limitations on excess losses allowed are $313,000 in 2025 ($626,000 married jointly) and are indexed for inflation. There may be opportunities to accelerate or defer income to better match such losses, to mitigate the impact of this limitation. |
| Tax Type | Effective Date | Provision | Comments |
|---|---|---|---|
| Business | Taxable years through 12/31/2033 | Capital Gains for Investments in Opportunity Zones | The act makes opportunity zones permanent, establishes a rolling 10-year opportunity zone designation, makes modifications to the definition of a low-income community, creates a new Rural Opportunity Fund, and makes other minor modifications to Opportunity Zone benefits. |
| Clean Energy | Vehicles acquired after 9/30/2025 | Termination of Clean Vehicle Credit | Originally scheduled to expire on 12/31/2032, the credit will no longer be available for vehicles acquired after 9/30/25. Conforming amendments are also made with respect to the applicable percentage for the critical minerals requirement. |
| Clean Energy | Expenditures after 12/31/2025 | Termination of Residential Clean Energy Credit | The credit is repealed for expenditures made after 12/31/25. |
| Clean Energy | Property placed in service after 12/31/2025 | Termination of Energy Efficient Home Improvement Credit | The credit is terminated for property placed in service after 12/31/2025. |
If you have any questions or need assistance, please reach out to a professional at Forvis Mazars.
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