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How the New Tax Law May Impact Your Personal & Business Finances

News

New Tax Law: How The One Big Beautiful Bill Act May Impact You

On July 3, 2025, following an all-night session, the U.S. House of Representatives narrowly passed the One Big Beautiful Bill Act (OBBBA) by a 218-214 vote. This follows the Senate’s approval on July 1, and President Trump signed the bill into law on July 4, 2025.

The OBBBA is sweeping legislation aimed at simplifying the tax code and making many of the tax cuts from the Tax Cuts and Jobs Act of 2017 permanent.

The OBBBA delivers approximately $4.5 trillion in tax cuts over ten years through corporate and individual tax reductions and related provisions. The legislation is projected to add over $3 trillion to the federal deficit, offset in part by $3.5 trillion in spending cuts, largely targeting federal social programs.

Given the size and scope of the bill (the actual document is over 900 pages in length) this legislation will take time to fully assess, and we are actively engaging in resources to learn all the changes coming from the new bill. Below, we highlight some of the key provisions that may impact your personal and business planning.

Individual Tax Highlights

  • Tax Rates & Brackets: The individual tax rates from the 2017 Tax Cuts and Jobs Act (TCJA) are made permanent, with additional inflation adjustments.
  • SALT Deduction Cap: Temporarily raised to $40,000 (2025–2029), reverting to $10,000 in 2030, with phase-down for MAGI over $500,000.
  • Mortgage Deduction: Makes the principal limit of $750,000 permanent.
  • Standard Deduction: Permanently increased to $15,750 (single) / $23,625 (head of household) / $31,500 (married filing jointly), with inflation indexing.
  • Senior Deduction: New $6,000 deduction for individuals age 65+, phased out at higher incomes (starting at $75,000 MAGI for single and $150,000 MAGI for joint).
  • Child Tax Credit: Increased to $2,200 per child, indexed for inflation.
  • Estate & Gift Tax: Exemption permanently raised to $15 million (single) / $30 million (married), indexed for inflation.
  • Itemized Deduction Limitation: Caps the value of itemized deductions at 35 cents per dollar for higher earners.
  • Charitable Giving: Individual charitable contribution deductions are now limited to the excess of 0.5% of an individual’s taxable income, essentially creating a “floor” for charitable deductions. For non-itemizers, a new deduction is created allowing for up to $1,000 to be deducted for single filers and $2,000 for joint filers.

Business Tax Highlights

  • Pass-Through Qualified Business Income (QBI) Deduction (Section 199A): Made permanent, with broader phase-in for certain service businesses.  
  • Bonus Depreciation: 100% expensing made permanent for short lived investments.
  • Section 179 Expensing: Limit increased to $2.5 million, with phaseout starting at $4 million.
  • R&D Deduction: Permanently restores full expensing of domestic R&D costs made permanent under new Section 174A.
  • Business Interest Limitation: Reverts to an EBITDA-based limitation, made permanent.
  • SALT Workarounds: Preserves pass-through entity tax (PTET) strategies to allow for higher deductibility of state income taxes paid at the business level.
  • Domestic Production Incentives: 100% expensing for qualified production property; advanced manufacturing investment credit increased from 25% to 35%.
  • Business Loss Rules: Disallows converting excess business losses to NOLs; the limitation is now permanent and applies to estates and trusts.
  • Clean Energy Credits: Most clean energy credits have been removed, including the clean hydrogen production credit, energy efficient commercial buildings, and clean electricity production credit.

Next Steps

The OBBBA introduces sweeping changes that may directly impact your personal and business tax plans, as well as your estate plan. We will continue to monitor the rollout of this legislation and provide updates as guidance is released.

We are planning to cover these changes with you in our upcoming meetings, however please do not hesitate to reach out to me to discuss any specific questions you have in the meantime.

Thank you for placing your continued trust in MCF.


Source: 

  • https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/
  • https://aldrichadvisors.com/insights/tax/obbba-tax-megabill/