Imagine trying to pack a single suitcase for a month-long vacation. You cram in clothes for every kind of weather, three pairs of shoes, a beach towel, and maybe even a coffee maker—just in case. That’s what the One Big Beautiful Bill Act feels like.
Signed into law on July 4, 2025, this sweeping legislation is bursting at the seams with tax changes. Some are permanent. Others are temporary. And a few feel like surprise items you didn’t realize you packed—until you’re halfway through the trip.
For tax preparers, this bill is full of big shifts and little quirks you’ll want to unpack before filing season begins.
1. Permanent Extension of 2017 Tax Cuts
- The individual income tax rates from the 2017 TCJA—which were due to expire at the end of 2025—are made permanent.
- The standard deduction remains at its elevated level indefinitely.
2. Cap on SALT Deduction Increased
- Temporarily raises the SALT cap to $40,000 for those earning < $500K; reverts to $10K after five years.
3. Temporary Income Deductions (Through 2028)
- No federal tax on tips and overtime pay, up to $25,000 each, for taxpayers earning < $150K.
- Auto loan interest deduction allowed (max $10K loan) for US‑assembled vehicles, with income phase-outs.
4. Senior Deduction Bonus
- Seniors aged 65+ qualify for a $6,000 deduction (max $12,000 for joint filers) if MAGI < $75K/$150K, phasing out at $175/$250K.
- Combine with standard deduction (e.g., $23,750 for singles, $46,700 for joint seniors).
5. Child Tax Credit Boost + “Trump Accounts”
- Credit increases from $2,000 → $2,200, indexed for inflation.
- New “Trump Accounts”: a $1,000 birth grant + $5K/year contributions into tax-deferred savings for eligible uses, expiring 2028.
6. Business‑Related Expensing & Pass‑Throughs
- 100% bonus depreciation becomes permanent for qualifying tangible personal property.
- Immediate write-off for domestic R&D expenses, retroactive allowed.
- Pass‑through (Section 199A) deduction is made permanent; thresholds increased by $50K/$100K, new minimum $400 benefit for qualifying small businesses.
7. International Business Income Changes
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Effective 2026, changes to international taxation include:
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The GILTI (Global Intangible Low-Taxed Income) deduction is reduced from 50% to 40%, increasing the effective U.S. tax rate on GILTI to approximately 12.6% for C corporations.
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The foreign tax credit (FTC) allowed against GILTI is limited to 80% of foreign taxes paid, and is subject to a new haircut of 10%, effectively further increasing GILTI tax exposure.
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The FDII (Foreign-Derived Intangible Income) deduction is modified, raising the effective tax rate from 13.125% to 14%, and streamlining the calculation to limit base erosion strategies.
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8. Estate, Gift & Endowment Taxes
- Estate/gift exemption jumps to $15M per person (indexed) starting in 2026.
- Endowment excise tax imposed on large private colleges (1.4–8% tiers).
9. Clean Energy & EV Credit Phase‑Out
- Phases out IRA-era green stimulus: EV credits end Sept 2025; clean energy incentives for wind/solar sunset by 2027.
- Methane fees delayed 10 years; biofuels credits extended to 2031.
What Tax Preparers Need To Know
- Adjust software and client checklists for new income exclusions, expiring deductions, and credit increases.
- Strategize with seniors on how to layer deductions and minimize taxable income.
- Prepare business clients to maximize depreciation, claim R&D, and qualify for the enhanced pass-through deduction.
- Advise international filers on GILTI and FDII changes that will affect 2026 forward.
- Watch out for public confusion; this bill does not eliminate the tax on Social Security, but offers deductions that reduce taxable income.
Want to unpack this legislative “suitcase” in real time?
Join us Wednesday, July 31st, from 2:00–4:00 PM ET for a critical webinar, OBBBA Key Highlights and Changes, featuring tax expert Jason Dinesen, EA, as he unpacks the dense details of the One Big Beautiful Bill Act. This legislation is packed with significant changes, and we’re here to make sense of it all.
This timely 2-hour session will cut through the complexity of the One Big Beautiful Bill Act—a sweeping law packed with new deductions, sunsetting provisions, and phaseouts. Jason will translate the dense legal text into practical, real-world guidance you can use immediately with your clients.
In this webinar, you’ll learn how to:
• Maximize short-term opportunities before temporary deductions disappear
• Navigate key updates that impact seniors, families, and small businesses
• Take proactive steps before major provisions begin to expire
Click here and register today, and get the clarity you need.
Conclusion
The OBBBA replaces short-term extensions with sweeping permanent tax reform, especially impactful for individuals, seniors, small businesses, and international filers. Your advisory role in navigating phased deductions, credit indexing, and expiration timelines will be essential.
