The One Big Beautiful Bill Act (often abbreviated OBBBA) is landmark U.S. tax and budget legislation signed into law on July 4, 2025 (Pub. L. No. 119-21) that overhauls a broad swath of federal tax policy. While its official short title was removed during the Senate amendment process, the popular name has stuck in public discourse and financial planning.
What Is the One Big Beautiful Bill Act?
The One Big Beautiful Bill Act represents one of the most significant tax code revisions in years. Its primary goal was to make permanent many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) that were scheduled to expire at the end of 2025. And at the same time, introduce new tax measures and incentives affecting individuals, families, and businesses.
This vast legislative package not only adjusts tax rates and deductions but also affects savings vehicles, charitable giving, estate planning, international taxation, and more. Its broad scope means nearly every corner of the U.S. tax code saw some change or clarification.
Key Features of the Tax Framework at a Glance
Here are some of the major highlights of the One Big Beautiful Bill Act and how they may affect taxpayers in 2025 and beyond:
01. 100% Bonus Depreciation Restored
What’s Changed: Full expensing is now available for qualifying assets placed in service after January 19, 2025. This means businesses can deduct the full cost of these assets in the year they’re acquired, rather than over several years.
Who’s Affected: All businesses acquiring qualifying equipment or property.
02.Additional Bonus Depreciation for Manufacturing
What’s Changed: Qualified production property (QPP) in the manufacturing sector will receive 100% bonus depreciation through 2032.
Who’s Affected: Domestic manufacturers and supply-chain businesses.
03.R&D Expensing Made Immediate for U.S. Research
What’s Changed: Domestic research and development (R&D) costs are now fully deductible under new rules. Companies with capitalized R&D expenses from 2022–2024 can take a catch-up deduction. Small businesses can apply full expensing retroactively for tax years after 2021.
Who’s Affected: Businesses engaged in research and innovation, especially those with recent R&D expenses.
04.Clean Energy Incentive Changes
What’s Changed: Several clean energy tax credits—including those for energy-efficient buildings and electric vehicles—will terminate for projects starting after June 30, 2026. Some credits for energy production must be claimed sooner, as eligibility ends for projects placed in service after December 31, 2027.
Who’s Affected: Real estate developers, energy companies, and those involved in green energy projects.
05.Section 179 Expensing Cap Increased
What’s Changed: The Section 179 expensing limit rises to $2.5 million, with the phase-out threshold now at $4 million.
Who’s Affected: Small businesses purchasing qualifying equipment or property.
06.State and Local (SALT) Deduction Adjustments
What’s Changed: The SALT deduction cap has been increased from $10,000 to $40,000 for most taxpayers, with the benefit phased out for households with adjusted gross income over $500,000. Existing workarounds via pass-through entity taxes remain available in many states.
Who’s Affected: Taxpayers in high-tax states, pass-through business owners, and higher earners.
07.Other Noteworthy Provisions
- Section 899 “Retaliatory Tax” is repealed.
- Excess Business Losses: Plans to permanently separate active pass-through losses from other income are not included.
- Section 163(j): Deduction limitations are now based on EBITDA, rather than EBIT.
- International Tax: GILTI and FDII provisions are tightened, with new terminology.
- Affordable Housing: The Low-Income Housing Tax Credit (LIHTC) ceiling is increased.
- New Middle-Class Deductions: Deductions are introduced for overtime pay, car loan interest, and tips.
Next Steps for Businesses and Individuals
- Review Your Plans: If you’re considering large purchases, R&D, or real estate projects, these changes may affect the timing and potential related deductions.
- Assess Cash Flow: Immediate write-offs and changes to credit availability could impact your tax payments and financial planning.
- Communicate Internally: Make sure stakeholders and teams are aware of how these updates might influence your strategies.
- Plan for Changes: Some provisions require elections or amended filings—be proactive in consulting with your advisor.
Get in Touch
Given that the One Big Beautiful Bill Act “reshapes” American tax policy, it is natural to have questions about these big changes. Our tax team is ready to help discuss your specific situation. We’re here to help you identify the best steps forward for your business or family. Contact your advisor or contact our helpful team for assistance.
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