Key Takeaways from The One Big Beautiful Bill Act (OBBBA) Federal Tax Reform
Posted by William P. Allen on August 11, 2025
Enacted on July 4, 2025, the Reconciliation Bill, officially named the One Big Beautiful Bill Act (OBBBA), brings major revisions to the U.S. tax code. Aimed at delivering long-term tax relief and boosting economic growth, the law establishes permanent tax reductions, broadens deductions, and raises benefit thresholds for individuals and businesses.
There are many provisions of the bill, but some of the top takeaways include:
(1) Permanent QBI Deduction
The 20% Qualified Business Income (QBI) deduction is now permanent for partnerships, sole proprietors, S-Corporation owners, and independent contractors, offering long-term tax savings for self-employed individuals.
(2) Expanded SALT Deduction Cap
From 2025 - 2029, the cap on SALT deductions increases from $10,000 to $40,000, increasing to 101% of the previous year's cap, providing significant relief for taxpayers in high-tax states. The deduction begins to phase out at modified adjusted gross income over $500,000 for 2025, adjusted annually. The phaseout cannot reduce the deduction below $10,000. In addition, the state pass-through entity tax (PTET) workarounds remain unchanged.
(3) Mortgage Interest Deduction Preserved
The deduction for mortgage interest is now permanently limited to the first $750,000 of acquisition debt. This cap was originally set by the 2017 TCJA and was scheduled to revert to $1 million in 2026. Additionally, mortgage insurance premiums will now be permanently deductible as an itemized deduction.
(4) Lower Individual Tax Rates
The individual income tax rates introduced under the TCJA are now permanent, preventing the scheduled rate increases that were set to take effect after 2025.
(5) Permanent Increased Standard Deduction
The standard deduction is permanently increased starting in 2025. The new deduction amounts for 2025 are $31,500 for married couples filing jointly; $23,625 for heads of household; and $15,750 for single filers. These amounts are indexed for inflation going forward, and the increase builds on the levels set by the 2017 Tax Cuts and Jobs Act
(6) Enhanced Child Tax Credit
The child tax credit increases permanently to $2,200 per child with up to $1,700 refundable. There was a permanent increase to the phaseout threshold to $200,000 ($400,000 joint). Both amounts will be indexed annually for inflation.
(7) Trump Accounts
The act created a new type of tax-advantaged savings account designed specifically for children under the age of 18 with contribution limit up to $5,000 per year, indexed for inflation. There will be a limited $1,000 federal credit for Trump Accounts open for children born between January 1, 2025 and December 31, 2028.
(8) State and Gift Tax Deductions
The federal estate, gift, and generation-skipping transfer (GST) tax exemptions were permanently increased. The lifetime exemption for each individual rises to $15 million starting in 2026, up from the 2025 level of $13.99 million. This exemption is indexed for inflation going forward.
(9) Above the Line Charity Deduction
OBBBA reinstates and expands the above-the-line charitable deduction for taxpayers who don’t itemize. Starting in 2026, individuals can deduct up to $1,000 (or $2,000 for married couples filing jointly) in cash donations to qualified public charities, directly reducing their adjusted gross income.
(10) Auto Loan Interest Deduction
From 2025-2028, taxpayers can now claim an above-the-line deduction of up to $10,000 per year for interest paid on auto loans—but only for new vehicles assembled in the United States. The deduction will phase out for taxpayers with a modified adjusted gross income in excess of $100,000 ($200,000 joint).
Brisbane Consulting Group is here to provide ongoing support and expert guidance on how these tax law changes may affect business valuations and matrimonial settlements. In partnership with our parent firm, Lumsden McCormick CPA, we offer tailored tax insights and strategies customized to each client’s unique circumstances.
Written by Megan Morris-Smith, CPA.
for more information
Bill is a partner with Brisbane Consulting Group Business Valuation Division, providing business valuation, forensic accounting, and litigation support services. His valuation experience includes the valuation of closely held companies, covering a wide range of industries and engagements including: marital dissolution, dissenting shareholder disputes, estates and gift tax planning, merger/acquisition, and due diligence reporting.