Written by: Aaron Hofmann, Staff Accountant
The One Big Beautiful Bill Act (OBBB), passed in July 2025, contains some interesting new provisions while also extending provisions of the Tax Cuts and Jobs Act (TCJA) of 2017.
The OBBB offers tax planning savings for 2025 and beyond for individuals.
Tax Planning and Saving Opportunities for Individuals
- Permanent Extension of TCJA Individual Tax Rates
The OBBB makes the individual tax rates permanent that were set forth by the TCJA.
- New Standard Deduction Amounts
For 2025 the standard deduction will see a little increase to $31,500 for married filling joint (MFJ), $23,625 for head of household (HoH), and $15,750 for single filers.
- Tips & Overtime Deductions
A new deduction of up to $25,000 can be taken on reported tip income.
Along with this provision, single filers may take a deduction of $12,500 for overtime pay and MFJ filers may take a deduction of $25,000 for overtime pay.
Both provisions are set to expire in 2028.
- Charitable Contributions
To maximize tax benefits for 2025, charitable contributions may be the way to go. Starting in 2026, charitable contributions will be subject to a 0.5% of Adjusted Gross Income (AGI) floor for people who itemize their deductions. This means that if a person who itemizes has an AGI of $100,000 the first $500 of charitable contributions would not be able to be deducted starting in 2026.
The OBBB also implemented a permanent deduction for charitable contributions for people who do not itemize. Single filers can receive up to a $1,000 deduction and MFJ filers can receive up to a $2,000 deduction for charitable contributions.
- Extended Child Tax Credit
For those taxpayers with children, the OBBB increased the child tax credit to $2,200 per child with an increase in the income phase-out thresholds.
- State and Local Tax (SALT) Benefits
Under the TCJA, the SALT deduction was capped at $10,000. The OBB jumped the cap up to $40,000 through 2029. This jump in cap will help tax savings for 2025 for individuals who itemize their deductions as they will possible see an increase in the SALT deduction.
Along with provisions for individuals, the OBBB also offers tax opportunities for small businesses and beyond.
Tax Saving Opportunities for Businesses
- Qualified Business Income (QBI) Deduction
The QBI Deduction of 20% was permanently extended and introduced a minimum deduction for active businesses.
- 100% Bonus Depreciation
The 100% bonus depreciation deduction is now permanently available for qualifying property. This means that not only in 2025, but beyond, businesses can fully deduct the cost of qualifying property in the year of purchase.
- Full Research and Development Expensing
Under the TCJA, businesses were required to capitalize and amortize R&D Expenses. With the passage of the OBBB, businesses can now fully expense R&D expenses in the year paid. This provision is retroactively applied from 2022, meaning that eligible small businesses may be able to go back and amend past tax returns to fully expense the R&D costs in the years that they were capitalized.
- Section 179 Expensing Increased
Section 179 expensing increased to $2.5 million under the OBBB for 2025. This means that small businesses may be able to immediately expense certain asset purchases in the current year. The above-mentioned items are just a small portion of the changes enacted by the OBBB for 2025. With the passage of this bill, it is a great time to get in contact with one of the qualified professionals at Molinari Oswald LLC and discuss how these provisions will impact your situation, and it is never too late to start planning for tax changes.
The above-mentioned items are just a small portion of the changes enacted by the OBBB for 2025. With the passage of this bill, it is a great time to get in contact with one of the qualified professionals at Molinari Oswald LLC and discuss how these provisions will impact your situation, and it is never too late to start planning for tax changes.
