It’s time to roll out the red carpet and honor the biggest hits (and misses) of the One Big Beautiful Bill Act (OBBBA). Signed by President Trump on July 4, 2025, the OBBBA is more than just a mouthful of letters. It’s a complex sequel to the Tax Cuts and Jobs Act (TCJA) that permanently extends many of the provisions we’ve grown to love (or hate) while creating additional tax breaks for individuals and businesses. So, grab some popcorn (or perhaps a calculator) and help us recognize the provisions that will shape tax policy for years to come.
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Best revival of a deduction
And the winner is: The qualified business income (QBI) deduction! Known as the star of the TCJA, IRC Sec. 199A allows pass-through business owners to deduct up to 20% of QBI, subject to limitations. This came with some drama, however, as the deduction was scheduled to expire at the end of 2025.
Thanks to the OBBBA, the QBI deduction is now permanent, which offers more stability when planning for QBI optimization. On top of that, starting in 2026, the OBBBA provides a $400 minimum deduction for businesses with at least $1,000 of QBI and increases the phase-in limitation range from $100,000 to $150,000 for joint filers (from $50,000 to $75,000 for other filers).
Honorable mention: Bonus depreciation. To the delight of most businesses, the OBBBA made permanent 100% bonus depreciation for property acquired and placed in service after January 19, 2025.
The whiplash award
This award honors those tax provisions that shouldn’t have been changed in the first place. And the winner is: Full expensing of research and experimental (R&E) expenditures! Starting in 2022, the TCJA required taxpayers to capitalize and amortize R&E costs over a five-year period (15 years for foreign R&E expenses). To put it lightly, everyone hated this provision. Thankfully, the OBBBA permanently reinstates full expensing of domestic R&E expenditures for tax years beginning after 2024. The bill also provides special transition rules for small businesses to expense R&E expenditures for tax years beginning after 2021.
Honorable mention: The Form 1099-K reporting threshold. Under the American Rescue Plan Act (ARPA), Form 1099-K reporting was required for payments over $600 (with no transaction minimum). The OBBBA reverts to the old rule, which requires reporting for payments over $20,000 and when the number of transactions exceeds 200.
Best newcomer
For the first time ever, we have a four-way tie in this category! And the winners are:
- The new deduction for seniors. Qualified individuals age 65 or older will receive a $6,000 deduction (subject to phaseout).
- The new deduction for qualified tips. This allows a deduction of up to $25,000 on reported qualified tips (subject to phaseout).
- The new deduction for qualified overtime. Taxpayers can now take a deduction of up to $12,500 ($25,000 for joint filers) for qualified overtime compensation (subject to phaseout).
- The new auto loan interest deduction. This is an interest deduction of up to $10,000 per year on qualified personal car loans (subject to phaseout).
The good news is that all four deductions are available starting this year.
Honorable mention: The Trump account, which is a new type of tax-preferred account for those under the age of 18.
Most dramatic plot twist
And the winner is: Expansion of the qualified small business stock (QSBS) gain exclusion! This was quite unexpected and may prompt investors to seriously consider certain types of small businesses. Before the OBBBA, IRC Sec. 1202 allowed shareholders to exclude from income 50%, 75%, or 100% of any gain from the sale or exchange of QSBS acquired and held for more than five years. The exclusion amount was the greater of $10 million or 10 times the aggregate basis of the stock.
Thanks to the OBBBA, the exclusion for QSBS issued after July 4, 2025 is now 50% if the QSBS is held at least three years, 75% if held at least four years, and 100% if held at least five years. Also, the exclusion amount is increased from $10 million to $15 million, with that amount indexed for inflation starting in 2027.
Honorable mention: The new excise tax on remittance transfers. Effective next year, this new provision imposes a 1% excise tax on certain remittance transfers, which are outbound transfers from U.S. accounts that are funded by cash, money order, cashier’s check, or any other similar physical instrument.
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Biggest crowd-pleaser
And the winner is: The increase to the state and local tax (SALT) cap! Yes, tax pros, this is the star of the OBBBA. As you know, the TCJA set the SALT cap at $10,000 ($5,000 for married filing separately). This proved to be unpopular, so the OBBBA increases the cap to $40,000 ($20,000 for married filing separately) for 2025 and $40,400 for 2026. For tax years beginning after 2026 and before 2030, the cap will be increased by 1% per year. For tax years beginning in 2030, the cap will revert back to $10,000 ($5,000 for married filing separately).
Honorable mention: The permanent increase to the standard deduction. For 2025, the amounts are $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers.
In memoriam
No awards show would be complete without an “In Memoriam” segment. Today, we say goodbye to the various energy-related credits from the Inflation Reduction Act. Most notably, the clean vehicle credit has been repealed for vehicles acquired after September 30, 2025. Also, the residential clean energy credit will no longer be available for expenditures made after this year.
As you can see, the OBBBA is a sweeping and complex bill. Now’s the time to learn its provisions, model potential impacts on clients, and be on the lookout for IRS guidance. And as they say in the tax world, there’s always another sequel on the horizon.
Lead with strategy, powered by technology
The One Big Beautiful Bill Act isn’t just another tax law—it’s a blockbuster sequel rewriting the rules for tax professionals. With permanent QBI deductions, four new individual deductions, expanded QSBS exclusions, and a dramatically increased SALT cap, the OBBBA presents unprecedented opportunities that demand strategic thinking and the right technology.
Whether you’re helping a senior client maximize their new $6,000 deduction, advising on QSBS timing strategies, or navigating the temporary SALT cap increase, success depends on having powerful tools to support your advisory vision:
- CoCounsel Tax for AI-powered analysis of the OBBBA’s intricate provisions and client-ready explanations that transform legislative complexity into actionable insights.
- GoSystem Tax for seamless collaboration, automated workflows to handle expanded calculations, and real-time integration capabilities to model multiple scenarios.
- UltraTax CS for intelligent handling of new deduction calculations, advanced diagnostics to identify optimization opportunities, and streamlined data management.
The OBBBA has rolled out the red carpet for strategic tax planning. Don’t let this legislative sequel catch you playing a supporting role—equip your firm with the technology and expertise to take center stage in the new era of tax advisory services.
The curtain has risen, the spotlight is on, and your clients are waiting for their standing ovation.
