On July 4, 2025, Public Law No. 119-21 (more familiarly known as H.R.1 – One Big Beautiful Bill Act, or “OBBA”) was signed into law, following passage by the 119^th Congress. Estate planners nationwide (and their clients) waited with bated breath to find out whether the federal estate tax exemption would sunset to approximately $7M (as it was scheduled to do in the Tax Cuts and Jobs Act of 2017 (TCJA)), or remain at $13.99M per person. OBBA eliminated the sunset, and raised the individual estate tax exemption to $15M, indexed to inflation, with no sunset in sight.

The bill is a vast piece of income tax legislation that spans approximately 869 pages of amended text. Much of the individual income tax legislation focuses on removing the December 31, 2025 sunsets for many of the 2017 tax cuts that were enacted with the TCJA. However, OBBA also includes many new tax provisions for individuals and businesses, effectively unwinding certain tax credits and incentives adopted under the Biden administration and the Inflation Reduction Act of 2022, and it further includes a reduction of various government programs and the expansion of others.

While this summary does not detail all of the legislation's changes, it addresses the most pressing items for individual taxpayers and businesses.

For Individual Income Tax Filers:

• The standard deduction for Tax Year 2025 increases to: $15,750 for individual filers; $31,500 for joint filers; and $23,625 for heads of household.
• The personal exemption for all filers under the age of 65 continues to be eliminated (a $2,000 personal exemption existed for all filers prior to the TCJA). However, there is now a $6,000 personal exemption for individuals who are 65 years and older (for Tax Years 2025 through 2028 only), with a phase out starting at $75,000 of modified adjusted gross income for individual filers and a $150,000 phase out point for joint filers.
• State and local taxes (SALT) are no longer capped at $10,000 (or at least not until 2030). The SALT deduction cap increases to $40,000 for 2025 for taxpayers with modified adjusted gross income of less than $500,000 for tax years 2026 through 2029, with an annual 1% inflation increase. In 2030, for taxpayers making less than $500,000, the SALT deduction will revert back to $10,000. For taxpayers with modified adjusted gross income over $500,000, the $40,000 cap phases out from 2026 through 2029.
• The child tax credit amount increases from $2,000 to $2,200 per qualifying child, with annual inflation adjustments. In order to claim the child tax credit, a filer is required to provide the child’s Social Security number, as has always been the case, but the filer must furnish a Social Security number for the filer claiming the tax credit, or at least one of the individuals claiming the tax credit if it is a joint return.
• For tax years 2025 through 2028 only, both joint and single filers can deduct up to $25,000 for tips received in an industry where tips are customary. This deduction phases out for those with modified adjusted gross income of $150,000, or $300,000 for joint filers.
• For tax years 2025 through 2028 only, workers can deduct up to $12,500 of their overtime earnings from taxable income ($25,000 for joint filers), also with a phase out for taxpayers with modified adjusted income of $150,000 (single) or $300,000 (joint).
• The mortgage insurance premium deduction that was last available in 2021 has now been reinstated.
• The deduction for personal casualty losses continues to be limited. In 2017, the TCJA generally limited personal casualty losses only to those arising from federally declared disasters. This limitation continues, except that OBBA now also includes “state-declared disasters.”
• Increases in the Alternative Minimum Tax (AMT) exemption that were passed as part of the TCJA remain. (The AMT exemption previously rose from $150,000 to $1,000,000 for joint filers; and from $112,500 to $500,000 for single filers.) However, OBBA now also reduces the exemption amount over that threshold by 50% instead of 25% by the amount by which the alternative minimum taxable income of the taxpayer exceeds the $1,000,000 or $500,000 threshold.
• Miscellaneous itemized deductions (such as professional association dues, home offices expenses and tax preparation fees) continue to be eliminated (as they were removed in 2017 with the TCJA) although a miscellaneous deduction for educator expenses continues to be available.
• In addition to limiting itemized deductions, there is also a new formula for limiting itemized deductions. Adjustments were further made to deductions for wagering losses (only 90% deductible instead of 100% deductible), moving expenses and qualified transportation reimbursement.
• No tax will be imposed on car loan interest (up to $10,000), but only for vehicles weighing less than 14,000 pounds that were assembled in the United States and were new vehicles purchased in tax years 2025 through 2028 only.

Also of note to individual filers, Section 529 has changed to expand what 529 college savings accounts can be used for: not just tuition and books, but also online educational materials, tutoring, nationally standardized achievement tests, and educational therapies for students with disabilities.

In addition to 529s, individuals under 18 can soon open a “Trump Account” and all babies with a valid Social Security number who were born between 2025 and 2028 will have access to $1,000 in government-funded savings accounts that can be opened at a bank of the parent’s choice and can be used for educational and other expenses. Contributions to each child’s account are otherwise capped at $5,000 per year and may include up to $2,500 contributed (tax free) by a parent’s employer. There is no concurrent deduction, but the money will grow tax free and must be invested in certain broad stock indexes.

For Businesses:

The bill includes a wide range of tax advantages for businesses, and here are just a few:

• Expansion of the Qualified Business Income Deduction. For small business owners, the phase-out limits for the qualified business income deduction found in Section 199A will now phase out at $75,000 for a single filer (instead of $50,000) and $150,000 for joint filers (instead of $100,000). In addition, there is now a minimum deduction of $400 for taxpayers with a minimum of $1,000 in qualifying income from certain trades and businesses.

• The Bring-Back of 100% Bonus Depreciation. The bill will now continue to allow businesses to deduct 100% of purchases for qualifying equipment and property in the year of the purchase. The TCJA otherwise had a schedule to phase out the percentage of bonus depreciation.

• Increased Deductibility of Debt. Also back are changes to the way in which a business’s adjusted taxable income is calculated, which makes it permissible to calculate it without considering deductions for depreciation, amortization and depletion, effectively increasing the business’s interest expense deduction under Section 163(j).

Not even mentioned are increases to the deductibility of certain research and development expenses, energy tax credits and a whole host of other things.

As noted, and as you may have a sense of after reading this summary: this bill is vast. For many taxpayers, understanding its implications going forward will require a highly personalized analysis of your situation. Our team at Larkin Hoffman is ready to assist individuals, families, and businesses in the choices they’ll need to make to optimize their outcomes in this new landscape.