GBE Clients,
We wanted to make you aware of current tax law changes. Please understand information is coming in at a rapid pace and we will not likely have quality implementation guidance until late November.
WHAT HAPPENED
On July 3, 2025, Congress finalized and passed “The One Big Beautiful Bill,” and President Trump signed it into law on July 4. This sweeping legislation enacts significant tax changes for both individuals and businesses, with most provisions taking effect beginning in the 2025 or 2026 tax years.
WHAT TO KNOW
Below is a summary of key tax provisions included in the final version of the bill:
TCJA Individual Tax Provisions Extended or Made Permanent
-
SALT Limitation Increase to $40,000 – Temporarily increases the state and local tax (SALT) itemized deduction cap to $40,000 for most taxpayers beginning in 2025, phasing down for incomes above $500,000, and reverting to $10,000 in 2030.
-
Extension of Modification of Rates – Makes the TCJA tax rates permanent and modifies the inflation adjustment mechanism for the various brackets.
-
Increased Standard Deduction – Makes the TCJA’s increased standard deduction amounts permanent with annual inflation adjustments.
-
Increased Child Tax Credit – Makes permanent the TCJA’s increased and enhanced child tax credit and ups the maximum credit to $2,200 per child beginning in 2025, indexed for inflation. $500 credit for other dependents made permanent.
-
Increased Estate and Gift Tax Exemption Amounts – Permanently increases the lifetime estate and gift tax exemption to $15 million per person ($30 million if married), subject to inflation adjustments after 2025.
-
Limitation on Deduction for Qualified Residence Interest – Permanently sets the limit for mortgage interest deductions at $750,000 in home mortgage acquisition debt and permanently excludes home equity indebtedness from the definition of qualified residence interest.
TCJA Business Tax Provisions Extended or Made Permanent
-
1099 Reporting Threshold Increase from $600 to $2,000 – Raises the information reporting threshold to $2,000 per year (indexed for inflation beginning in 2027).
-
Deduction for Qualified Business Income – Makes permanent the 20% Sec. 199A deduction with expanded eligibility.
-
100% Bonus Depreciation (1/19/2025) – Permanently reinstates 100% first-year depreciation for property acquired and placed in service after January 19, 2025.
New Individual Tax Provisions
-
No Tax on Tips – Deduction of up to $25,000 for reported tips (2025–2028), phased out for high earners.
-
No Tax on Overtime – Deduction for qualified overtime pay up to $12,500 ($25,000 if married) from 2025–2028.
-
Enhanced Deduction for Seniors – $6,000 deduction for individuals 65+ from 2025–2028.
-
No Tax on Car Loan Interest – Deduction up to $10,000 for vehicle loan interest (2025–2028), subject to restrictions.
-
529 Plan Rule Changes – Expands 529 use to K–12 and non-college programs.
-
Reinstatement of Partial Deduction for Non-Itemizers – Up to $1,000 single / $2,000 joint.
-
New Limit on Itemized Charitable Deductions – 0.5% of AGI haircut.
-
New Scholarship Tax Credit – $1,700 credit for donations to scholarship-granting organizations.
-
New Limit on Gambling Losses – Starting in 2026, only 90% can offset winnings.
-
Trump Accounts – New tax-advantaged accounts for children under 18.
-
Dependent Care Assistance Programs – Increased limit to $7,500.
-
New Opportunity Zone Investments – Opportunity zones made permanent with new designations in 2026.
-
Removal of Residential Green Energy Tax Credits – Credits end after 2025.
-
SALT PTET Workarounds – No federal limitation included in the final bill.
-
Termination of Overall Limitation on Itemized Deductions – Pease limitation permanently repealed.
-
Termination of Miscellaneous Itemized Deductions – Permanently eliminated.
-
Extension of AMT Relief – Permanently increases AMT exemption and phaseout thresholds.
New Business Tax Provisions
-
100% Depreciation for Qualified Production Property – Applies to manufacturing real property placed in service before 2030.
-
New 179 Expense Limitations – Increases Sec. 179 cap to $2.5 million (phaseout starts at $4 million).
-
Residential Percentage-of-completion Exception – Applies to certain residential construction contracts.
-
Minimum Deduction for Qualified Business Income – $400 minimum deduction for $1,000+ of QBI with material participation.
-
Return to $20,000 1099-K Threshold – Reinstates original threshold and transaction count.
-
Removal of Green Energy Tax Credits – Eliminates many clean energy incentives after 2025.
-
Qualified Small Business Stock Changes – New graduated exclusion rates based on holding period and a $15M gain cap.
-
163(j) EBITDA-Based Limitation Reinstated – Restores more favorable interest limitation calculation.
-
Excess Business Loss Limitation – Permanently retained; converts to NOLs.
-
Corporate Charitable Deduction Limit – 1% haircut on C-Corp charitable deductions.
-
Domestic R&D Deduction Restored – Immediate deductibility restored permanently starting in 2025, retroactive expensing allowed.
This legislation represents one of the most significant overhauls to the federal tax code since 2017. While many provisions are now permanent, others are temporary and may evolve with future administrations. We are closely monitoring IRS guidance as implementation unfolds and will provide further updates as they become available.