On July 4, 2025, Congress passed the One Big Beautiful Bill Act (OBBBA). This law has reshaped how individuals and businesses manage income, deductions, and compliance. At TripleH CPA PLLC, we're breaking down the key provisions to keep you ahead of the changes that have been made by the new law.
For Individuals: What's Changing
No Tax on Tips, Overtime, and Car Loan Interest
Starting this year 2025, income from tips, overtime pay, and car loan interest is exempt from federal income tax.
Standard Deduction Boost
The standard deduction jumps to $15,750 for individuals and $31,500 for joint filers, with annual inflation adjustments. Standard deduction for seniors is now $21,750 for individuals and 43,500 for joint filers.
Itemized Deduction Cap
Beginning in 2026, itemized deductions are capped at 35% of taxable income, potentially affecting high-income filers. That means you cannot deduct more than 35% of your taxable income irrespective of how much you spend on deductible expenses.
Expanded SALT Deduction
The State and Local Tax (SALT) deduction cap increases to $40,000, with phased growth through 2029. This benefit phases out for incomes above $500,000.
What "phased growth through 2029" means: The cap will increase gradually from 2025 through 2029.
- 2025: Cap increases from $10,000 to $20,000
- 2026: Cap increases from $20,000 to $30,000
- 2027-2029: Cap reaches $40,000, then remains same until modified
For Businesses: Incentives and Opportunities
QSBS Gain Exclusion Expanded
The exclusion for Qualified Small Business Stock (QSBS, IRC Section 1202) gains rises from $10 million to $15 million, and the holding period drops from 5 years to 3 years for stock issued after July 4, 2025. IRC Section 1244 remains unchanged. Investors can still claim ordinary loss treatment on qualifying small business stock. Together, Sections 1202 and 1244 continue to support small business investment.
Section 179 Gets a Boost Under OBBBA
The One Big Beautiful Bill Act (OBBBA) not only makes 100% bonus depreciation permanent, but also doubles the Section 179 expensing limit:
- New cap: $2.5 million (up from $1.25 million)
- Phase-out threshold: Raised to $4 million from $3.05 million
- Effective date: Applies to qualifying property placed in service after December 31, 2024
- Inflation indexing: Both limits will adjust annually
This expanded Section 179 deduction gives businesses greater flexibility to immediately expense equipment, software, and certain improvements—especially helpful for asset-heavy operations.
Bonus Depreciation & R&D Expensing Made Permanent
Businesses can now permanently claim 100% bonus depreciation and full expensing for research and development, fueling growth and innovation. Before now, under TCJA R&D expenses were required to be capitalized and amortized over five years.
What You Should Do Now
These changes could affect your tax liability, investment strategy, and compliance obligations. TripleH CPA PLLC is here to help you:
- Reassess payroll and tip reporting strategies
- Maximize deductions under the new rules
- Evaluate QSBS eligibility and timing
- Plan for long-term compliance and audit readiness