The One Big Beautiful Bill Act — Now the Real Work Starts

On July 3rd, 2025, the House passed the Senate's amended version of the One Big Beautiful Bill Act (OBBBA), officially locking in the most sweeping tax overhaul since 2017. The final law spans nearly 900 pages and touches virtually every corner of the tax code, impacting individuals, business owners, and estate planning strategies alike. Whether you’re a small business operator, a salaried professional, a gig worker, or someone looking ahead to legacy planning, there’s something here that’s about to affect your tax landscape.

This blog unpacks the biggest changes so you can quickly understand what’s new, what’s staying, and what you need to do about it. It's not meant to be an exhaustive list of every clause and cross-reference, but rather a breakdown of the provisions most relevant to taxpayers like you. Here’s what you need to know about deductions, credits, and estate rules that just shifted.

Think of this as your quick-reference playbook. We kept it focused on the provisions likely to impact the most people—and flagged practical action steps to take before these changes kick in.

Acronym Key

• OBBBA – One Big Beautiful Bill Act
• MFJ – Married Filing Jointly
• SALT – State and Local Tax
• PTET – Pass-Through Entity Tax
• QBI – Qualified Business Income
• R&D – Research and Development
• EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization
• NOL – Net Operating Loss
• FTE – Full-Time Equivalent
• HOH – Head of Household
• AGI – Adjusted Gross Income
• OT – Overtime
• FLSA – Fair Labor Standards Act
• SSN – Social Security Number

Small Business Provisions

The provisions below are especially relevant to owners of S corps, partnerships, sole proprietorships, and LLCs, as well as anyone managing contractor payments, investing in capital equipment, or offering tax-favored employee benefit plans.

Provision

• 20% QBI Deduction
• SALT/PTET
• 100% Bonus Depreciation
• Section 179 Expensing
• R&D Expensing
• Interest Deduction (§163(j))
• Excess Business Losses
• Info Returns
• CHOICE Credit

What Changed

• 20% QBI Deduction: Made permanent with softened wage-and-asset thresholds
• SALT/PTET: SALT cap raised to $40k (indexed); PTET workaround remains in play
• 100% Bonus Depreciation: 100% Bonus Depreciation: Made permanent
• Section 179 Expensing: Limit raised to $2.5M, indexed
• R&D Expensing: Immediate deduction for U.S. R&D reinstated and made permanent
• Interest Deduction (§163(j)): Returns to EBITDA-based limitation permanently
• Excess Business Losses: Limitation made permanent; excess no longer becomes NOL
• Info Returns: 1099-K: $20k/200 txns; 1099-NEC/MISC: $2k floor (2026 forward)
• CHOICE Credit: 2-year tax credit for cafeteria plans

Thresholds / Limits

• 20% QBI Deduction: Phase-in begins at $400k (MFJ), phased out at $500k
• SALT/PTET: Cap applies through 2029; phases out above $500k AGI
• 100% Bonus Depreciation: Applies to qualified property placed in service after 1/1/2025
• Section 179 Expensing: Phase-out begins at $12.5M
• R&D Expensing: Domestic expenses only
• Interest Deduction (§163(j)): Applies to businesses >$25M in gross receipts
• Excess Business Losses: Applies to individuals and passthroughs
• Info Returns: Reporting rules ease burden for small-scale payors
• CHOICE Credit: <50 FTEs; phases out from $75k–$100k income

Action Items

• 20% QBI Deduction: Re-evaluate reasonable comp vs. distributions for S-Corps; revisit entity structure if over phase-out
• SALT/PTET: Confirm 2025 PTET elections; model long-term impact if income exceeds phase-out
• 100% Bonus Depreciation: Accelerate capital expenditures; run cost seg studies; align with growth initiatives
• Section 179 Expensing: Strategically time major equipment purchases to stay under cap
• R&D Expensing: Shift innovation efforts back to U.S.-based teams; revisit international contractor mix
• Interest Deduction (§163(j)): Re-model leverage strategies; evaluate risk exposure under new threshold
• Excess Business Losses: Adjust entity-level timing; consider grouping strategies to offset exposure
• Info Returns: Audit contractor payment practices; automate forms in accounting systems
• CHOICE Credit: Evaluate your benefits menu before open enrollment; calculate credit value vs. cost

Individual Taxpayer Provisions

Whether you're a salaried employee, a parent, a retiree, or juggling a combination of income streams, the changes below likely apply to you.

Provision

• Tax Rates
• Standard Deduction
• Senior Deduction
• Child Tax Credit
• SALT Deduction
• Charitable Giving
• Green Energy Credits
• Temporary Deductions
• Student Loan Interest
• Universal Savings Account
• Home Energy Credit

What Changed

• Tax Rates: TCJA rates made permanent; 2025 offers boost for lower brackets
• Standard Deduction: Permanently raised
• Senior Deduction: Temporary $6k add-on deduction (2025–2028)
• Child Tax Credit: Increased to $2,200/child and made permanent
• SALT Deduction: Cap temporarily increased to $40k
• Charitable Giving: Above-the-line + itemized tweaks
• Green Energy Credits: Most repealed after 2025
• Temporary Deductions: New deductions: tips, OT, auto loan interest
• Student Loan Interest: Deduction limit increased to $5k
• Universal Savings Account: Tax-free growth on post-tax contributions
• Home Energy Credit: Credit of up to $4k/year

Thresholds / Limits

• Tax Rates: Applies to all filers; inflation adjusted
• Standard Deduction: $30k (MFJ), $22.5k (HOH), $15k (Single); indexed
• Senior Deduction: Phases out above $75k AGI
• Child Tax Credit: Indexed after 2026
• SALT Deduction: Phases out above $500k AGI; reverts to $10k in 2030
• Charitable Giving: $1k (Single), $2k (MFJ); 0.5% AGI floor for itemized
• Green Energy Credits: Limited carryover
• Temporary Deductions: Phased out at $250k/$400k (Single/MFJ)
• Student Loan Interest: Phases out at $165k/$330k AGI
• Universal Savings Account: $10k/year
• Home Energy Credit: Solar, insulation, battery

Action Items

• Tax Rates: Review marginal brackets and Roth conversion timing
• Standard Deduction: Reevaluate if itemizing still makes sense in 2025 and beyond
• Senior Deduction: Time retirement withdrawals and RMDs to stay eligible
• Child Tax Credit: Update withholdings and plan for changes in 2026
• SALT Deduction: Coordinate with PTET planning and SALT bunching techniques
• Charitable Giving: Consider donor-advised funds or stacking strategies to clear new floor
• Green Energy Credits: Finalize home upgrades by December 31, 2025; verify eligibility windows
• Temporary Deductions: Keep documentation for 2025 only; model eligibility
• Student Loan Interest: Revisit payoff schedules; run refi vs. deduction scenarios
• Universal Savings Account: Treat like a hybrid Roth/emergency fund; consider as part of college or home planning
• Home Energy Credit: Bundle eligible upgrades in 2025 to maximize combined credits

New Deductions for Tips and Overtime Pay (2025–2028)

These temporary deductions target service workers and hourly employees by reducing taxable income for reported tips and overtime pay.

Provision

• Tips Deduction
• Overtime Pay Deduction

What Changed

• Tips Deduction: New above-the-line deduction for reported tips
• Overtime Pay Deduction: New above-the-line deduction for qualifying OT pay

Thresholds / Limits

• Tips Deduction: Up to $25,000/year; phases out at $150k (Single)/$300k (MFJ)
• Overtime Pay Deduction: Up to $12,500/year (Single); $25,000 (MFJ); same phase-out

Action Items

• Tips Deduction: Ensure accurate W-2/1099-NEC reporting; verify SSN; maintain proper records
• Overtime Pay Deduction: Track hours; verify W-2 accuracy; run savings scenarios under new rules

Clarifications for Employers: These deductions do not change employer reporting or payroll tax obligations. Social Security and Medicare taxes must still be withheld and paid on both tips and overtime earnings.

Planning Tip: Maintain precise year-to-date earnings records, especially if you fall near the phase-out range. This will help maximize your eligibility during 2025–2028.

Estate & Legacy Provisions

These changes affect individuals with larger estates, high-net-worth families, and anyone doing multigenerational planning.

Provision

• Estate Tax Exemption
• Gift Exclusion
• Step-Up in Basis

What Changed

• Estate Tax Exemption: Increased in 2026
• Gift Exclusion: Raised starting 2025
• Step-Up in Basis: No change

Thresholds / Limits

• Estate Tax Exemption: $15M (Single) / $30M (MFJ); indexed
• Gift Exclusion: $20k/person; indexed
• Step-Up in Basis: N/A

Action Items

• Estate Tax Exemption: Revisit gifting and trust plans before sunset revisions
• Gift Exclusion: Maximize early gifts to family, trusts, and education plans
• Step-Up in Basis: Continue planning based on existing step-up rules

The Dark Horse Bottom Line

The OBBBA 2025 didn’t just tweak the tax code—it rewired it. This law touches nearly every aspect of tax planning: income, deductions, estate strategy, and business expense treatment. For many taxpayers, the opportunity isn’t just to comply—it’s to re-optimize.

If you’re a Dark Horse client, we’re already factoring these changes into your projections and roadmaps. If you’re not, and you found us through this post, welcome. We specialize in helping business owners, high-earners, and families navigate complexity with confidence.

Some provisions are already in effect—get ahead now rather than waiting for year-end. Book time with your Dark Horse advisor today to put this legislation to work for you.