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ONE BIG BEAUTIFUL JOURNEY.

What is the "One Big Beautiful Bill"?

The "One Big Beautiful Bill" Act, also referred to as the "OBBB", is new legislation passed by congress that includes some of the most significant tax changes since the Tax Cuts and Jobs Act of 2017. These changes impact both individuals and business and are effective for the 2025 tax year and beyond.

PTBC CPAs has assembled a summary of this bill. It is intended to offer a high-level overview of selected provisions from the “One Big Beautiful Bill” that may impact taxpayers. This is not a comprehensive or exhaustive summary of the entire legislation, not all provisions have been included in this list, and many of these provisions are subject to income limitations. The information shared here should not be construed as tax advice, legal advice, or a substitute for professional consultation. We have differentiated between provisions for businesses and individuals. However, several provisions may impact both businesses and individuals. We encourage you to familiarize yourself with both lists.

PTBC CPAs is here to help guide you navigate the changing tax landscape and understand how these changes may impact you and your business.

Bonus Depreciation

The OBBB permanently extends the additional first-year bonus depreciation and increases the allowance to 100% for property acquired and placed in service on or after January 19, 2025.

Employer Provided Child Care Credit

The amount of qualified child care expenses taken into account for this credit increased from 25% to 40%. The maximum amount of this credit increases from $150,000 to $500,000 ($600,000 for eligible small businesses) and will be adjusted for inflation.

Employer Credit for Paid Leave

The Employer Credit for Paid Family and Medical Leave was made permanent.

This is a general business credit eligible employers may claim and is based on wages paid to qualifying employees while they are on family and medical leave.

Section 179 Expensing

The maximum amount a taxpayer may expense under Sec. 179 is increased to $2.5 million.

Qualified Small Business Stock

The Sec. 1202 exclusion for gain from qualified business stock sales is increased from 50% to 75% if held for at least four years. The exclusion increases up to 100% if held for five years or more.

Qualified Business Income Deduction

The Qualified Business Income Deduction (QBID) was made permanent.

The QBID allows allows eligible taxpayers to deduct up to 20% of their Qualified Business Income (QBI), plus 20% of REIT dividends and qualified PTP income.

Business Interest Limitation

The bill reinstates the EBITDA limitation. For tax years beginning after December 31, 2024, the interest deduction limitation will compute adjusted taxable income without depreciation, amortization, or depletion, increasing the amount of deductible interest.

Clean Energy Credits & Incentives

A large number of clean energy incentives were terminated. This includes clean vehicle credits (terminates after September 30, 2025) and energy efficient home improvement credits (terminates after December 31, 2025).

Reporting Changes

The form 1099 reporting threshhold increased to $2,000 for 2025 and will be adjusted for inflation annually. The previous limit was $600.

Form 1099-K reporting is not required unless the net dollar amount of all transactions exceeds certain limits.

Tax Brackets

Tax brackets enacted in 2017 under the Tax Cuts and Jobs Act were made permanent.

Charitable Contribution Deduction

Taxpayers can claim an above the line deduction up to $1,000 for single filers or $2,000 for joint filers for certain charitable contributions.

This deduction is available to those taking the standard deduction.

Mortgage Interest Deduction Limits

The limit for deducting mortgage interest on the first $750,000 of home mortgages was made permanent.

Trump Accounts

Trump Accounts will be IRAs for the exclusive benefit of individuals under 18. The accounts must be designated as Trump accounts at the time of creation. Employers will be able to contribute to these accounts and contributions will not be included in the employee's income. A pilot program provides a $1,000 tax credit for opening an account.

Changes to Tax on Tips and Overtime

For the years 2025-2028, taxpayers can deduct up to $25,000 in tips from their income on their federal tax returns. Taxpayers can also deduct $12,500 for single filers and $25,000 for joint filers in overtime pay on their federal income tax returns. The AGI phaseout begins after $150,000 for single filers and $300,000 for joint filers.

Farmland Sales

Income tax resulting from the sale of farmland to a qualified farmer can be paid in four annual installments.

Increased Standard Deduction

The standard deduction has been raised to the following:

Single: $15,750
Married Filing Jointly: $31,500

SALT Cap Increase

The cap for itemized filers regarding State and Local Taxes (SALT) paid increases from $10,000 to $40,000 for 2025. The cap will increase 1% through 2029 and is scheduled to revert back to $10,000 in 2030.

Child Tax Credit Increase

The Child Tax Credit increased to $2,200 per qualifying child and will be adjusted for inflation moving forward. Other related items that were made permanent include the increased phaseout for the credit, $500 credit for all other dependents, and the $1,400 refundable credit. The refundable credit will also be adjusted annually for inflation.

Credit for SGO Donations

There is a new credit up to $1,700 for donations to Scholarship Granting Organizations (SGOs). This provision also excludes income from scholarships for the qualified secondary or elementary education expenses of eligible students.

Estate and Gift Tax Exemption Increases

Beginning in 2026, there are permanent increases to the estate tax exemption and lifetime gift tax exemption amounts to $15 million for single filers and $30 million for joint filers These amounts will be annually indexed for inflation in years following 2026.

Additional Senior Deduction Increase

Taxpayers age 65 or older, who take the standard deduction, will now receive a $6,000 additional deduction. This increased from $1,950 for single filers and $1,550 per senior for joint filers.

Mortgage Insurance Premium Deduction

The mortgage insurance premiums paid will once again be considered qualified residence interest and will be deductible on Schedule A.

Child and Dependent Care Credit

The Child and Dependent Care Credit increased from 35%to 50% of qualifying expenses.

Section 529 Plans

Tax-exempt distributions from Sec. 529 savings plans are now allowed to be used for additional educational expenses in connection with enrollment or attendance at an elementary or secondary school. This provision allows for tax-exempt distributions to be used for "qualified postsecondary credentialing expenses".

Crypto Reporting Requirements

Taxpayers will see stricter reporting rules for digital assets, including new Form 1099-DA (Digital Assets).

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