What tax changes are in the Big Beautiful Bill?

The One Big Beautiful Bill, signed into law on July 4, 2025, brings with it a sweeping package of tax changes and budget measures that will have a broad impact on individuals, families and businesses. The legislation makes permanent several provisions from the 2017 Tax Cuts and Jobs Act (TCJA), while introducing new incentives for workers and business owners. As taxpayers try to make sense of what’s changed, many are asking practical questions: Will I pay less in taxes? What do the changes mean for my retirement or business planning? And how long will these provisions last? 

One of the most notable elements of the bill is the extension and, in some cases, expansion of tax cuts for individuals and small businesses. The lower individual tax rates enacted under the TCJA, which were originally set to expire in 2025, have now been made permanent. This offers continued relief for middle-income earners and provides more predictability for long-term financial planning. The standard deduction remains high, reducing the number of people who itemize and simplifying tax filings for millions of Americans. 

For business owners, this bill offers more than tax simplification. It creates actionable planning opportunities across multiple areas: entity structuring, equipment investment, retirement planning and even employee compensation strategies. Let’s dive into the details. 

For Businesses: Key Tax Breaks & Compliance Changes 

Bigger Tax Incentives for Investment and Expansion 

The bill introduces or expands several provisions aimed at encouraging capital investment, manufacturing and innovation: 

  • 100% Bonus Depreciation Made Permanent
    • Now retroactive to qualifying property purchased or placed in service on or after Jan. 19, 2025. 
  • Section 179 Expensing Limit Increased
    • Businesses can now deduct up to $2.5 million in qualifying property (up from $1.16 million limit 2023 level). The deduction begins to phase out at $4 million in asset cost. 
  • New Deduction for Qualifying Production Property
    • Allows 100% expensing of structures used in manufacturing. Applies to construction that begins between Jan. 19, 2025, and Jan. 19, 2029, if placed in service before Jan. 1, 2031. 
  • R&D Expensing Restored for Small Businesses
    • Domestic R&D costs can now be expensed immediately for businesses with gross receipts under $31 million. These businesses may also retroactively deduct expenses from tax years beginning after Dec. 31, 2021. Businesses with average gross receipts under $31 million can begin expensing these costs in 2025. Also, large business taxpayers with R&D expenses after 2021 and before 2025 may deduct remaining expenses over a one- or two- year period, beginning in 2025. 
  • Advanced Manufacturing Credit
    • Increases from 25% to 35%, incentivizing U.S.-based production facilities. 
  • Paid Family and Medical Leave Credit
    • Made permanent, providing continued support for employers offering leave benefits. 
  • Qualified Small Business Stock (Sec. 1202) Exclusion Expanded
    • For stock acquired after enactment, gain exclusions increase: 
      • 50% if held for three years 
      • 75% if held for four years 
      • 100% if held for five years or more 
  • Opportunity Zones and New Markets Tax Credit
    • Both made permanent to support community investment. 
  • Farmland Sale Deferral (Sec. 1062)
    • Tax from farmland sales to a qualified farmer can now be paid in four annual installments. 
  • Interest Exclusion for Ag Loans
    • Allows a 25% exclusion of interest received on loans secured by agricultural land. The borrower’s  deduction is reduced proportionally. 
  • Percentage of Completion Exception
    • Certain residential construction contracts are now exempt from this revenue recognition method, helping small builders manage taxable income timing.
  • EBITDA-Based Limitation on Business Interest Deduction Reinstated (IRC Sec. 163(j))
    • The bill permanently reinstates the EBITDA-based (earnings before interest, taxes, depreciation and amortization) formula for calculating the business interest expense limitation. This replaces the more restrictive EBIT-based standard that had been phased in. This change provides broader deductibility for leveraged businesses.
  • Modifications to the Excess Business Loss Limitation
    • The legislation also includes technical and structural changes to the excess business loss calculation, offering additional clarity and predictability in tax planning for pass-through owners and investors.
  • QBI Deduction Expanded
    • The 20% deduction is now permanent and adds a $400 minimum deduction for taxpayers with at least $1,000 in qualified business income from active participation.
Workforce & Childcare Incentives 
  • Employer Childcare Credit Increased
    • Rises from 25% to 40%, up to $600,000 annually—encouraging more employers to offer on-site or subsidized childcare solutions. 
Reporting & Compliance Changes 
  • 1099-K Threshold Restored
    • Returns to the previous $20,000 and 200 transaction threshold, reducing the burden on casual sellers and small e-commerce businesses. 
  • 1099-NEC/MISC Threshold Increased
    • Starting in 2026, reporting is only required for non-employee payments of $2,000 or more (indexed for inflation). This change may reduce the number of 1099s businesses must issue. 
  • ERC Compliance Tightened
    • The Employee Retention Credit program now includes stricter claim deadlines and new penalties for non-compliance. 
  • New 1% Remittance Transfer Tax
    • Applies to certain outbound cash transfers, such as money orders or cashier’s checks. Withdrawals from bank accounts or credit cards are excluded. 
  • SSN Requirements for Education Credits
    • Taxpayers must provide a valid SSN to claim the American Opportunity or Lifetime Learning Credits. 
Clean Energy Tax Credit Phase-Out 
  • Most Clean Energy Credits Sunset by 2026–2028
    • This includes credits for electric vehicles, solar panel installations and home energy upgrades. 
  • Clean Fuel Production Credit (45Z)
    • Extended through 2029, maintaining incentives for low-carbon fuel producers. 

For Individuals: Lower Rates and New Deductions 

Tax Rates and Deductions 
  • Permanently Lower Tax Brackets
    • The TCJA’s individual income tax brackets are now permanent. Annual adjustments for inflation will continue. 
  • Higher Standard Deductions for 2025 
    • $15,750 – Single 
    • $23,625 – Head of Household 
    • $31,500 – Married Filing Jointly 
  • SALT Deduction Cap Temporarily Increased
    • The state and local tax deduction cap is raised to $40,000 for 2025, increasing by 1% annually through 2029. A phaseout begins for incomes over $500,000. 
  • Alternative Minimum Tax (AMT) Exemption Increased
    • Now permanently set at $500,000 for single filers and $1 million for joint returns, indexed for inflation. 
Family-Friendly Provisions 
  • Child Tax Credit
    • Increased to $2,200 per child in 2025. The refundable portion of $1,400 is now permanent. 
  • Child & Dependent Care Credit
    • Rises to 50% of eligible expenses. 
  • Adoption Credit
    • Now up to $5,000 and fully refundable. 
  • Dependent Care Assistance
    • Exclusion from income raised from $5,000 to $7,500. 
Senior Benefits and Retirement Planning 
  • Temporary Senior Deduction (2025–2028)
    • A $6,000 deduction is available for individuals age 65+ with modified adjusted gross income under $75,000 ($150,000 for joint filers). This helps shield Social Security income from federal tax. 
  • Estate & Gift Tax Exemption Increased
    • Starting in 2026, the exemption rises to $15 million per individual and $30 million per couple, indexed for inflation. 
Other Notable Individual Provisions 
  • Mortgage Interest Deduction Cap Made Permanent
    • Limited to interest on up to $750,000 of mortgage debt. 
  • Casualty Losses Expanded
    • Now includes losses from certain state-declared disasters. 
  • Charitable Giving for Non-Itemizers
    • A new above-the-line deduction is available for up to $1,000 (or $2,000 for joint filers) in charitable contributions. 
  • Trump Accounts
    • New savings accounts for children, capped at $5,000 per year. Includes a $1,000 tax credit for children born between 2025 and 2028. Employers may contribute on a tax-free basis. 
  • 529 Plan Expansion
Temporary Deductions (2025–2028) 
  • Tip Income Deduction
    • Up to $25,000 in tip income may be excluded for individuals earning under $150,000 ($300,000 joint filers). 
  • Overtime Income Deduction
    • Up to $12,500 per person ($25,000 joint returns) of overtime wages may be excluded. 
  • Car Loan Interest Deduction
    • Up to $10,000 may be deducted for new U.S.-assembled vehicles, even for non-itemizers. 

Takeaways & Action Steps 

What This Means for Business Owners: 

  • Permanent deductions and accelerated expensing create new opportunities for reinvestment. 
  • Workforce credits and childcare incentives could offset benefit costs. 
  • Compliance relief for 1099s and tax certainty on business income helps with long-term planning. 

What This Means for you Personally: 

  • Lower tax rates and new deductions provide expanded savings potential. 
  • Estate planning thresholds and retirement-related deductions support multigenerational planning. 
  • Temporary exclusions for tips, overtime and car loan interest offer near-term cash flow opportunities. 

What to Do Now: 

  • Adjust your tax withholdings and estimated payments. 
  • Evaluate the timing of equipment purchases and charitable giving. 
  • Review employee benefit offerings and payroll systems. 
  • Work with your tax advisor to identify new credits, deductions and compliance responsibilities. 

Need help interpreting how these provisions apply to your situation? Contact an Adams Brown tax advisor for a personalized analysis of how the One Big Beautiful Bill could impact your business, your family and your future.