The One Big Beautiful Bill Act: what actually changes for individuals and business owners
Signed into law in July 2025, the OBBBA makes most of the expiring TCJA provisions permanent, reworks the SALT cap, and introduces a handful of new deductions worth planning around now.
The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. It is the most significant piece of federal tax legislation since the Tax Cuts and Jobs Act in 2017, and for most of our clients it locks in the rate structure and deduction rules they've been operating under — while adding a handful of new wrinkles that are worth planning around before year-end.
Individual rates and the standard deduction are now permanent. The seven-bracket structure topping out at 37%, and the roughly doubled standard deduction ($15,750 single / $31,500 married for 2025), no longer sunset at the end of 2025 as originally scheduled. For most households this means the planning conversations we've been having about a 2026 rate increase are off the table.
The SALT cap is temporarily lifted to $40,000 for 2025 through 2029, then reverts to $10,000 in 2030. The cap phases down for taxpayers with modified AGI above $500,000. For California clients, this meaningfully changes the math on the PTE elective tax — it's still valuable for high earners, but the break-even point has shifted and we're rerunning the numbers for every affected client.
Section 199A (the 20% qualified business income deduction) is made permanent and the phase-in thresholds were widened, which is a clean win for pass-through owners. 100% bonus depreciation is also restored permanently for qualifying property placed in service after January 19, 2025 — if you've been deferring a large equipment purchase, this is the provision to plan around.
Two new above-the-line deductions are worth knowing about: up to $25,000 of qualified tip income and up to $12,500 of qualified overtime pay are deductible for 2025 through 2028, subject to income phase-outs. There's also a new deduction of up to $10,000 of interest on loans for U.S.-assembled vehicles, and an additional $6,000 deduction for taxpayers age 65 and older.
The estate and gift tax exemption is made permanent at an inflation-adjusted $15 million per individual ($30 million per married couple) beginning in 2026. For clients who were rushing to use exemption before a 2026 sunset, that pressure is off — though the planning case for lifetime gifting hasn't changed much on the merits.
What to do now. If you own a pass-through entity in California, we're scheduling a planning session to rework the PTE election math against the new $40,000 SALT cap. If you were sitting on a large capital expenditure, the restored 100% bonus depreciation changes the timing. And if you have tip or overtime income in the household, there's paperwork to get right on the W-2 side so the new deductions flow through cleanly.