A fireworks finale wasn’t the only headline on Independence Day. President Trump’s Big Beautiful Bill (BBB) became law on July 4, marking the most sweeping rewrite of the federal tax code since the 2017 Tax Cuts and Jobs Act, and unveiling a host of new tax-saving opportunities for households and businesses alike.
Businesses
Expensing & Depreciation
Permanent 100 percent bonus depreciation-Assets placed in service after January 19, 2025, including machinery, equipment, and certain building improvements, can, once again, be fully expensed in the first year, accelerating cost recovery and improving cash flow.
Section 179 cap raised- Small and midsize businesses may now expense up to $2.5 million of qualifying purchases, with the deduction phasing out once total acquisitions exceed $4 million, keeping the benefit focused on companies with moderate capital budgets.
Domestic R&D expensing – Research performed in the United States is again fully deductible in the year incurred, whereas foreign research must continue to be amortized over 15 years. Small businesses can retroactively apply this change back to 2022 by filing amended returns. All taxpayers are eligible to accelerate capitalized Section 174 costs from 2022 to 2024 by electing a catch-up deduction, allowing the remaining unamortized expenses to be deducted over one or two years.
Section 461 Excess Business Loss Limitation – This provision was set to expire at the end of 2028, but the Bill makes the excess business loss limitation permanent for non-corporate taxpayers, capping how much business loss can offset non-business income each year. Losses beyond the annual threshold must be carried forward as net operating losses, with new rules requiring current-year business income to deduct prior-year excess losses.
Pass-Through & Financing Deductions
Interest-expense limit eased- The §163(j) ceiling is now calculated using EBITDA rather than EBIT, allowing capital-intensive companies to deduct more of their borrowing costs by adding back depreciation and amortization.
Pass-through Entity Tax — Taxpayers who own pass-through businesses and have elected to use state-level pass-through entity (PTE) tax regimes can continue to benefit from these arrangements. They remain advantageous for those still affected by the new income limitations and federal SALT cap deduction limitations.
Individuals
Rates, Standard and Senior Deductions
Tax brackets-The BBB locks in today’s individual tax rates beyond 2025, eliminating the scheduled return to higher pre-TCJA levels.
Higher standard deduction-Beginning with 2025 returns, the first slice of income protected from tax expands to $15,750 for single taxpayers, $23,625 for heads of household, and $31,500 for married couples filing jointly, allowing filers to shield more of their earnings before the first dollar is taxed.
Enhanced senior deduction-Taxpayers who are 65 or older can now pick up an additional $6,000 deduction each year from 2025 through 2028 (phases out for higher incomes).
AMT Shield & Estate Exclusion
Permanent AMT relief-The larger Alternative Minimum Tax exemption is now locked in, pushing the parallel tax far out of reach for the majority of households and eliminating an annual surprise for many upper-middle-income filers.
Estate and gift exclusion increase – The estate and gift tax exemption is now $15 million per individual or $30 million for married couples, allowing more assets to pass to future generations free of federal transfer tax.
Deductions
Tip-income deduction-For 2025 through 2028, up to $25,000 of qualified tips can be subtracted directly from income, reducing taxable income dollar-for-dollar without requiring itemized deductions. The deduction will phase out when a taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 for joint filers).
Overtime deduction-The same four-year window, 2025 through 2028, allows employees to deduct as much as $12,500 per person of overtime pay (subject to income limitations), providing relief for those whose extra hours push them into higher brackets.
Vehicle-loan interest-Borrowers who finance a new passenger vehicle with final assembly in the United States may write off up to $10,000 of interest on their tax returns for the years 2025 through 2028. This includes both four-wheeled and two-wheeled vehicles.
Charitable Deductions- Beginning after December 31, 2025, taxpayers who take the standard deduction will be allowed to deduct up to $1,000 in charitable contributions ($2,000 for joint filers). This reinstates a popular pandemic-era incentive for everyday giving. However, for taxpayers who itemize, a new limitation applies. Only charitable contributions that exceed 0.5% of the taxpayer’s adjusted gross income will be deductible.
QBI deduction made permanent- The 20 percent pass-through break survives beyond 2025, with a phase-in expanding to taxpayers earning up to $75,000 (single) or $150,000 (joint) and a $400 minimum deduction for small businesses with at least $1,000 of qualified business income.
Credits & Savings Opportunities
Larger Child Tax Credit-The credit increases to $2,200 per qualifying child, with the $1,400 refundable portion now permanently in place.
TRUMP account-The BBB introduces the TRUMP account, an IRA-style savings plan parents can elect for any child under 18. Up to $5,000 in after-tax contributions may be made each year (until the child turns 18) and invested in mutual funds and ETFs. Earnings grow tax-deferred. Once the beneficiary reaches 18, qualified withdrawals are allowed and taxed at long-term capital-gain rates, but the account must be fully distributed by age 31. Babies born between 2025 and 2028 may receive a one-time $1,000 federal seed deposit, which counts toward that year’s contribution limit.
Expanded 529 plan-Annual distributions of up to $20,000 per student can now cover a broad range of K-12 expenses, tuition, books, tutoring, and extracurricular supplies, turning the 529 into an all-purpose education fund rather than a college-only vehicle.
Energy Credits Phasing Out. The BBB sets a firm sunset schedule for many of the “green” incentives introduced in recent years. The Clean Vehicle and Clean Commercial Vehicle credits, the residential energy-efficient property credit, and several manufacturing and production incentives for solar, wind, and battery components all begin winding down after 2025 and terminate entirely by the end of 2027. Projects placed in service before the cut-off dates may still claim the full benefit, but those that miss the window will see sharply reduced or zero credits.
Itemized Deductions
Temporarily higher SALT cap- The ceiling on state-and-local-tax deductions leaps to $40,000 in 2025 and then rises by roughly one percent per year through 2029 before reverting to $10,000 in 2030, offering a four-year window for taxpayers in high-tax states to maximize relief. Once modified AGI surpasses $500,000, the allowable SALT deduction shrinks by 30 percent of the excess income, though it can never fall below $10,000.
Investment Incentives
Qualified Small Business Stock (QSBS)– For shares issued after the law’s enactment, investors can now exclude half of any gain if they hold the stock for at least three years, 75 percent after four years, and the full 100 percent once the five-year mark is reached. The amount of gain that can be sheltered from tax per issuer also climbs to $15 million. The asset ceiling for a corporation rises to $75 million (up from $50 million), allowing more growing companies and their early backers to take advantage of the expanded benefit.
Credits & Reporting Updates
ERC window closed-Claims for the Employee Retention Credit had to be filed by January 31, 2024; late requests will not be processed.
Key credits extended-Incentives for low-income housing, new markets, paid family leave, and employer-provided childcare are made permanent and, in several cases, enhanced.
Higher 1099 thresholds-Form 1099-NEC is now required only when non-employee compensation exceeds $2,000, and payment processors will issue Form 1099-K only after transactions total more than $20,000 and number at least 200, restoring pre-2023 reporting levels.
Looking Ahead
Whether you are mapping out a family budget or finalizing next year’s capital-expenditure plan, the BBB’s blend of bigger deductions, expanded credits, and faster write-offs creates both opportunities and deadlines. Our RGCO tax team is already integrating the new law into projections and can help you analyze income timing, purchase decisions, and potential gifts to maximize your benefits. Contact our advisors to discuss how The Big Beautiful Bill may reshape your 2025 and 2026 tax strategies.
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