The One Big Beautiful Bill Act (OBBBA) Executive Summary

Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) introduces sweeping changes to tax, entitlement, and energy policy. Below are the most important updates for individual taxpayers, followed by key provisions affecting businesses and the economy.

Key Individual Provisions

State and Local Tax (SALT) Deduction Expansion

– Deduction cap increased from $10,000 to $40,000 beginning in 2025

– Applies to state and local income, property, and sales taxes

– Phase-out begins at $500,000 modified AGI, indexed annually

– Especially valuable for filers in high-tax states like NY, NJ, CA, CT

Family & Education Benefits

– Child Tax Credit raised to $2,200/child, with $1,700 refundable

– Newborn children receive $1,000 “Trump Accounts” — government-seeded investment accounts with optional parent/employer contributions

– Expanded 529 Plan uses: include tutoring, caregiving certifications, and more

– Student loan reforms:

• Grad PLUS loans eliminated July 2026
• Lifetime cap: $200,000 for professional degrees; $257,500 overall
• College loan cuts: PLUS loans capped at $20,000/year/child

Senior Incentives

– Additional $6,000 deduction for seniors 65+ ($12,000 for couples)

– Phased out above $75,000/$150,000 income thresholds

– Available through 2028

Worker Income Benefits

– Tips (up to $25,000) and overtime income (up to $12,500 or $25,000 for married filing joint) can be deducted, subject to income limitations

– Applies 2025–2028

Healthcare Changes

– Medicaid work requirements begin in 2027

– Stricter eligibility rules expected to reduce enrollment

Car Loan Interest Deduction

– Up to $10,000/year in interest on new U.S.-assembled vehicles, subject to income limitations.

Business & Economic Updates

Small Business Tax Relief

– 20% deduction on qualified pass-through business income (Sec 199A) made permanent

-Expanded phase-in range for middle-income filers

– Estate Planning

– Estate tax exemption increased to $15 million/person beginning in 2026

Energy Incentives

– Fossil fuel producers regain key deductions, credits, and lease access

– Clean energy credits phased out for wind/solar projects after 2027

Investment Incentives

–100% expensing for capital investments including equipment, factories, and R&D

Healthcare & ACA Cuts

– Over $1 trillion in reductions to Medicaid and Affordable Care Act subsidies

– New cost-sharing rules and income restrictions introduced

Next Steps for Clients:

– Review current tax planning strategies in light of the new law.

– Consult with our team for tax projections, entity structure optimization, real estate and investment planning, and R&E/manufacturing incentives.