The One Big Beautiful Bill Summarized

BUSINESS TAX PROVISIONS

1. Revitalization of Bonus Depreciation

• • 100% bonus depreciation extended through 2028.
  • Applies to most new and used business equipment, technology, and vehicles.
  • Applies to property acquired after January 19, 2025.

Pro Tip: Use our OBBB Bonus Depreciation Calculator to run tax savings projections of buying qualified equipment for your business.

2. Special Depreciation Allowance

• • Qualified Production Property.
  • 39-year nonresidential real property.
  • Eligible for 100% bonus depreciation.
  • Construction begins after January 19, 2025 and before January 1, 2029.
  • Placed in service before January 1, 2031.

3. Revitalization of Research & Development (R&D) Expensing

• • Full expensing of qualified R&D expenditures under Sec 174A.
  • Any amount paid or incurred in connection with the development of any software is treated as R&D.
  • Qualified Small Businesses eligible to elect to claim deduction retroactively to 2022.

4. Expansion of Qualified Small Business Stock Gain Exclusion

• • Exclusion limitation increased from $10 million to $15 million, subject to limitations of when the stock was acquired and sold.
  • Expanded applicable percentages:
    • 3 years stock held = 50% applicable percentage
    • 4 years stock held = 75% applicable percentage
    • 5 years or more stock held = 100% applicable percentage

PERSONAL TAX PROVISIONS

1. Tip Income Exemption

• • The first $25,000 in tip income is now exempt from federal income tax.
  • Applies to service industry workers who report tips and meet eligibility rules.
  • The Treasury Department is set to issue a list of “approved occupations” for further clarification.

Pro-Tip: Use our OBBB Tip Tax Savings Calculator to determine the potential tax savings on your annual tips.

2. Overtime Tax Exemption

• • Overtime pay qualifies for a tax deduction up to $12,500 for a single filer ($25,000 for a joint return).
  • Applies to hourly W-2 employees working more than 40 hours/week.
  • Aims to reward hard work without additional tax burden.

Pro-Tip: Use our OBBB Overtime Tax Savings Calculator to determine the potential tax savings on your annual overtime pay.

3. Expanded Child Tax Credit

• • Permanently increased the credit by $200 to a total of $2,200 per qualifying child.
  • Refundable credit is capped at $1,400 per child.

4. Car Loan Interest Deduction

• • Up to $10,000 tax deduction for interest paid on qualified passenger vehicle loans.
  • A passenger vehicle must:
    • Have at least 2 wheels
    • Be for personal use
    • Be manufactured primarily for use on public streets, roads and highways
    • Be under 14,000 pounds of gross vehicle weight
    • Have final assembly occur in the United States

5. State And Local Tax (SALT) Deduction

• • The previous SALT deduction limit of $10,000 increases to $40,000 with 1% increases in years 2026-2029.
  • Taxpayers with income (MAGI) over $500,000 ($250,000 for married filing separately) are subject to a phaseout that can reduce the benefit down to the previous limit of $10,000.
  • Taxpayers in higher income and property tax states and jurisdictions (i.e. CA, NY, DC) would see the most tax relief.

Pro-Tip: Use our OBBB SALT Estimator to determine the potential tax deductions allowed.

6. Mortgage Interest & HELOC Interest

• • Starting in 2026, this law permanently disallows home equity interest to be included in itemized deductions.
  • Treats certain mortgage insurance premiums as qualified residence interest.
  • Mortgage debt limitation remains at $750,000 ($375,000 for married filing separately).

Need help? Our parent company BizTax Advisory LLC can help you stay proactive and integrate the new OBBB laws into your tax, business and financial plans.