Trump to Sign Historic One Big Beautiful Bill Tax Cuts Into Law
“The One, Big, Beautiful Bill" (OBBB) successfully navigated both the House and Senate with narrow, party-line votes in both chambers. The legislation was sent to President Trump's desk July 3, meeting the party's self-imposed Independence Day deadline, and signed into law by President Trump on July 4, 2025.
The Congressional Budget Office projects the legislation will expand federal deficits by $3.4 trillion through 2034. The bill permanently extends most Tax Cuts and Jobs Act provisions, including reduced individual rates, expanded standard deductions, enhanced child tax credits, and increased estate tax exclusions.
Business-friendly provisions receiving permanent status include full 100% expensing, complete bonus depreciation, and the 20% passthrough deduction. The state and local tax deduction cap rises to $40,000 through 2029 before reverting to $10,000. Although initially eliminated in the House version, the SALT cap workaround has been preserved.
The legislation also provides enhanced disaster relief for 2025 federal disaster victims, including Los Angeles wildfire survivors, allowing casualty loss deductions without itemizing while eliminating the 10% AGI threshold and raising per-casualty limits to $500.
The package incorporates several signature Trump initiatives: tax relief for tip income, overtime compensation, and automotive loan interest. Despite widespread concerns over Senate modifications, the House ultimately embraced the legislation following the upper chamber's July 1 approval.
Summary Tax Policy Framework
We are actively monitoring this legislation and analyzing how these provisions will impact our clients' tax situations. While final enactment requires presidential signature, we don't anticipate changes to the legislation at this point.
We're staying ahead of implementation details and will proactively identify opportunities where these new rules could provide more favorable tax treatment for your specific circumstances. We encourage you to reach out to discuss how these changes may affect your particular situation.
Key Tax Provisions
State and Local Tax (SALT) Deduction
Current Framework: Limits deductibility of state and local income, sales, and property taxes to applicable limitation amounts (generally $10,000), expiring at year-end 2025.
OBBB Approach: Raises the SALT cap to $40,000 through 2029, implementing phase-out provisions for high-income earners above $500,000 ($250,000 for married filing separately). The cap reverts to $10,000 after 2029.
SALT Workaround Provisions
Current Framework: IRS guidance permits passthrough entities (partnerships and S corporations) to elect state tax payments at the entity level, providing owners with state tax credits that effectively circumvent SALT limitations.
OBBB Approach: While the House’s original version of the legislation eliminated the SALT workarounds, the final legislation omits any provision concerning the SALT workaround, thereby preserving existing workaround mechanisms, subject to future IRS guidance.
Bonus Depreciation and Expensing
Current Law: Provides bonus depreciation for qualifying property acquired after September 27, 2017, with expiration at year-end 2026.
OBBB Provision: Permanently allows 100% bonus depreciation for property acquired and placed in service on or after January19, 2025.
Business Asset Depreciation Enhancement
Current Law: Up to $1 million in qualifying property costs may be expensed.
OBBB Framework: Establishes $2.5 million maximum expensing, reduced proportionally when qualifying property costs exceed $4 million. Both thresholds receive inflation adjustments for taxable years beginning after 2025, applicable to property placed in service after December31, 2024.
Entertainment Industry Expensing
Current Law: Allows deduction of up to $15 million in production costs, requiring cost capitalization over time.
OBBB Enhancement: Expands special expensing rules to encompass sound recording costs up to $150,000 annually, qualifying sound recordings for bonus depreciation.
Production Property Depreciation
Current Framework: Requires most real property depreciation over 39 years.
OBBB Framework: Allows elective 100% depreciation for newly constructed qualified production property, encompassing nonresidential real property integral to qualified manufacturing, agricultural, chemical production, or refining operations. Effective for property with construction commencing after January 19, 2025, and before 2029, requiring service placement before 2033.
Estate and Gift Tax Modifications
Current Law: $13.99 million exclusion for decedents in 2025, expiring at year-end 2025.
OBBB Framework: Establishes $15 million exclusion beginning in 2026, with inflation indexing.
Individual Income Tax Rate Structure
Current Brackets: Seven-tier system ranging from 10% to 37%, with specific thresholds for married joint filers, expiring at year-end 2025.
OBBB Framework: Preserves seven-bracket structure (10%, 12%, 22%, 24%, 32%, 35%, 37%) with annual chained CPI indexing. Brackets under 24 percent get an additional year of inflation adjustment. Effective January 1, 2026.
This summary encompasses the major OBBB tax policy initiatives most relevant to our clients. All provisions remain subject to presidential action and potential future legislative modification.
This Toplitzky&Co publication provides information and comments on tax issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide tax advice. Readers should seek specific tax advice before taking any action with respect to the matters discussed herein.
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