Article | by Troy Banker & Rachel Henrichs

On July 3, 2025, the U.S. House of Representatives passed the final version of the “One Big Beautiful Bill Act” (OBBBA), a sweeping tax and spending package that introduces significant changes to the U.S. tax code. The OBBBA, which passed the Senate earlier this week, is expected to be signed into law by President Trump over the July 4^th weekend.

This article highlights some of the key tax provisions affecting individuals and businesses, along with next steps and planning considerations.

Individual Tax Provisions

• Deduction for Tip Income: Up to $25,000 in tip income may be deducted from federal taxable income. This deduction phases out for incomes above $150,000 (single) or $300,000 (joint).
• Overtime Pay: Taxpayers may deduct up to $12,500 (single) or $25,000 (joint) of overtime pay from federal taxable income through 2028. The deduction phases out for individuals earning more than $150,000 (single) or $300,000 (joint)
• Tax-Free Child Savings Accounts: Tax-advantaged savings accounts for education or first-time home purchases, with contributions growing tax-free.
• Extra Deduction for Seniors: Introduce a temporary deduction for individuals over age 65 to offset income taxes. Available from 2025 through 2028 and subject to limitation based on income level.
• Limit on State and Local Tax (SALT) Deductions: Temporarily raises the SALT deduction to $40,000 for households earning under $500,000. The deduction phases down for higher earners but does not fall below $10,000. The deduction reverts to $10,000 in 2030.
• SALT Passthrough Entity Tax Deductions Remain. The final bill allows for the deduction of state and local taxes paid through state-enacted passthrough entity taxes, helping to minimize the SALT cap for passthrough business owners. These deductions were in question in earlier versions of the bill.
• Standard Tax Deduction: The 2017 Tax Cuts and Jobs Act (TCJA) increased the standard deduction; this bill makes that change permanent. For 2025, the standard deduction is:
  • $15,750 for single filers
  • $23,625 for heads of household
  • $31,500 for married couples filling jointly
• Other provisions of the 2017 TCJA are now permanent:
  • Individual rate reductions and bracket changes are now permanent. The top individual tax rate remains at 37%.
  • The qualified passthrough income deduction is made permanent.
  • The limitation on excess business losses for noncorporate taxpayers is now permanent, continuing to cap the amount of business losses that can offset other income.
  • The deduction for qualified residence interest on the first $750,000 of mortgage indebtedness is permanently extended.
  • The exclusion of miscellaneous itemized deductions is made permanent. Miscellaneous itemized deductions include, for example, unreimbursed employee expenses and investment-related expenses.

Business Tax Provisions

• Full Deduction for Business Equipment: Permanently restores 100% bonus depreciation for qualified property placed in service on or after January 19, 2025.
• New Bonus Depreciation for Manufacturers. The OBBA introduces 100% bonus depreciation for Qualified Production Property until 2029. A new potential benefit for US manufacturers and supply-chain operators.
• Immediate Deduction for Research Costs: Allows full expensing for domestic research and development (R&D) costs incurred after December 31, 2024. Foreign R&D expenses must continue to be amortized over 15 years.

Taxpayers with average annual gross receipts of $31 million or less may generally apply this change retroactively to tax years beginning after December 31, 2021 through amended prior year returns.

Additionally, all taxpayers who incurred domestic research or experimental expenditures after December 31, 2021, and before January 1, 2025, may elect to accelerate the remaining deductions for those expenditures over a one- or two-year period.

• Business Interest Limitation: Businesses subject to the Section 163(j) limitation may now be able to deduct more interest on loans, as the formula used to calculate the limit—Adjusted Taxable Income (ATI)—now permanently includes depreciation and amortization.

Changes to Clean Energy Tax Credits

• Some Credits Are Ending: Electric vehicle (EV) tax credit, wind and solar production/investment credits, residential energy efficiency credits. There is limited transition relief available related to the expiration of the credit.

Estate Tax Provisions

• Estate and Gift Tax Exemption: Elevated exemption made permanent and indexed for inflation. For 2026, the exemption is $15 million per taxpayer.

What Happens Now

• It’s expected that President Trump will sign the bill
• IRS and Treasury guidance may be forthcoming in certain areas
• State tax conformity may vary

We’re Keeping an Eye on the Changes

At Geffen Mesher, we’re actively tracking the implementation of the OBBBA. This article does not cover all the provisions included in the OBBBA. Our team is diving into the details, evaluating how the legislation will impact our clients, and will share more information soon.

Geffen Mesher’s team is available to assist you with questions related to these updated rules. Please contact Troy Banker at Tbanker@gmco.com or Rachel Henrichs at rhenrichs@gmco.com for more information.