Have you heard about the One Big Beautiful Bill Act (OBBBA)? President Trump signed the legislation into law on July 4, and this sweeping tax legislation addresses various tax priorities of the Trump administration including offering deductions to reduce income taxes on overtime pay and on certain tips, along with extending many of the provisions nearing expiration from the Tax Cuts and Jobs Act (TCJA), P.L.115-97.
With the bill offering both tax cuts and increases that would affect nearly all businesses and investors, taxpayers are encouraged to focus on evaluating its impact and pinpointing opportunities and challenges for planning.
Key affected areas to note for Individuals:
- TCJA’s individual tax rates are permanent
- Increased standard deduction is permanent
- Temporarily increases the state and local tax cap from $10,000 to $40,000
- Child tax credit increases to $2,200
Key affected areas to note for Businesses:
- Qualified Business Income (QBI) deduction of 20% is permanent for pass-through entities
- Bonus depreciation of 100% is permanent for qualified property
- Section 179 expensing limit is $2.5 million
- Section 174 domestic research costs are immediately expensed, including a retroactive “fix” for any capitalized amounts in 2022-2024 by small taxpayers
- Interest expense deduction limitation calculation cap is increased
- Creates a 100% deduction for the cost of “qualified production property” placed into service after July 4, 2025
To learn more about how these changes may impact you directly, contact your trusted advisors at Kruggel Lawton. Additional resources are available through our Alliance firm partner BDO.
