The One Big Beautiful Bill Explained: What It Means for Your Business and Personal Taxes

Posted on July 25, 2025 by Oozle Media

On July 4, 2025, the “One Big Beautiful Bill” (OBBBA) was signed into law. This legislation includes significant updates to the tax code for individuals and businesses, making permanent several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introducing new deductions and incentives. Below is a summary of the key tax-related changes that may affect individual and business taxpayers.

Individual Tax Provisions

The bill makes permanent the existing TCJA tax brackets and standard deduction levels. Taxpayers will continue to file under the current rates, with no scheduled sunset. In addition, the standard deduction is increased further for taxpayers age 65 and older—an additional $6,000 for single filers and $12,000 for married couples filing jointly. This enhancement applies for tax years 2025 through 2028.

The cap on the state and local tax (SALT) deduction is raised to $40,000 for individuals with adjusted gross income (AGI) below $500,000. For taxpayers with income above that threshold, the cap phases out, and the original $10,000 limit returns beginning in 2030 unless extended by future legislation.

New deductions have been introduced for specific categories of earned income. For tax years 2025 through 2028, individuals may deduct up to $25,000 in tip income. Additionally, all overtime wages are fully deductible, provided they are reported on W-2 forms. These deductions are subject to verification through employer reporting.

The Child Tax Credit is increased to between $2,200 and $2,500 per qualifying child, indexed for inflation. This expanded credit is in place through 2028.

Business and Investment Provisions

For businesses, the 20% qualified business income deduction under IRC Section 199A is made permanent. This provision applies to eligible income from sole proprietorships, partnerships, S corporations, and certain trusts and estates.

Rules governing Qualified Small Business Stock (QSBS) have been updated. The maximum asset threshold to qualify for QSBS treatment is raised to $75 million. Capital gain exclusions are now tied to the holding period: 50% exclusion after three years, 75% after four years, and 100% after five years. These changes are intended to expand access to preferential gain treatment for startup investors and small business owners.

The bill also restores 100% bonus depreciation for eligible property, including new manufacturing facilities. The requirement to amortize research and development expenses under prior law is repealed, allowing businesses to immediately deduct qualifying R&D costs.

Planning Considerations

Taxpayers with earned income from tips or overtime should review their withholding and estimated tax payments in light of the new deductions. Seniors may benefit from increased standard deduction thresholds and should consider their eligibility. Business owners should evaluate the impact of permanent Section 199A treatment, revised QSBS rules, and changes to expensing and depreciation.

These provisions take effect beginning with the 2025 tax year. Further direction and clarification of the provisions of the Bill will be forthcoming and we will post updates to the blog (or future blogs) as additional information, clarification and guidance becomes available. For assistance with tax planning or compliance under the new law, please contact our office.