One Big Beautiful Bill at a Glance
On July 4, 2025, President Trump signed the 900‑page One Big Beautiful Bill Act (OBBBA). Think of it as a sequel to the 2017 Tax Cuts and Jobs Act (TCJA): it locks in many TCJA provisions that were set to expire, sprinkles in new breaks for working families, and widens a few long‑standing small‑business incentives. Most changes apply to the 2025 tax year (the return you’ll file in 2026), though a handful are retroactive.
What’s in it for Individuals?
| Change | Why It Matters | What You Need to Know |
|---|---|---|
| Lower tax brackets stay | Avoids a built-in tax hike that was set for 2026 | The current 10%–37% brackets are now permanent and will adjust with inflation each year |
| Bigger standard deduction | Reduces taxable income for people who don’t itemize | Starting in 2025: $15,750 (single), $23,625 (head of household), $31,500 (married filing jointly) |
| Charitable deduction for non-itemizers | Lets more people get a tax break for giving | You can deduct up to $1,000 (single) or $2,000 (married filing jointly) for cash donations without itemizing |
| Child Tax Credit bump | Gives families more money back per child | The credit increases to $2,200 per child in 2025 and will adjust for inflation; income limits still apply |
| Temporary SALT cap relief | Higher write-offs for property and state taxes | The deduction cap jumps to $40,000 from 2025–2029, then drops back down; phases out if your AGI is over $500K |
| No tax on tips and overtime | Big savings for service and hourly workers | You can deduct up to $25,000 in tips and $12,500 in overtime, with phase-outs starting at $150K income |
| Social Security relief for seniors | Helps retirees keep more of their benefits | If your AGI is under $75K ($150K joint), you can deduct up to $6K ($12K joint) in Social Security income through 2028 |
| Auto loan interest deduction | Tax break for financing a U.S.-made car | Deduct up to $10,000 in interest, with the benefit phasing out above $100K AGI |
Practical Takeaways
For most workers, the big win is that the lower tax rates and higher standard deduction are here to stay. Families should double-check their paycheck withholdings for 2025 and update any estimates for the child tax credit. If you earn a lot through tips or regular overtime, you could see some of the biggest savings.
Whats in it for Businesses?
| Change | Why It Matters | Key Details |
|---|---|---|
| 20% Qualified Business Income (QBI) deduction made permanent | Locks in a top-line cut for sole proprietors, S corps, partnerships | Same 20% rate, but the income “phase-in” window widens to $75k single / $150k joint |
| Section 179 cap jumps to $2.5 million | Lets owners expense (not depreciate) more equipment in the first year | Phase-out starts at $4 million; both amounts adjust for inflation; applies to assets placed in service after 12/31/2024 |
| 100% bonus depreciation revived | Immediate write-off boosts cash flow on large capital purchases | Applies to qualified assets placed in service after 1/19/2025 |
| Instant expensing of U.S. R&D costs | Encourages innovation without a multi-year payback | Retroactive to 2022 for eligible small businesses |
| More generous business interest deduction | Eases borrowing costs | Returns to the EBITDA formula, allowing higher interest write-offs starting in 2025 |
| Expanded Qualified Small Business Stock (QSBS) break | Makes attracting investors and eventually selling more rewarding | Exclusion ceiling rises to $15 million; adds 50% (3-year) and 75% (4-year) holding options; asset cap jumps to $75 million |
Practical Takeaways for Small Businesses
Small business owners still get the helpful 20% tax break, but the biggest wins are the higher limits for writing off equipment and the return of full bonus depreciation. These changes let you get your money back faster when you buy things like tools, tech, or office upgrades. Add in the ability to deduct R&D costs right away and easier rules for writing off interest, and 2025 could be a great year to invest in your business.
Actionable Steps
1. Mark your calendar. Most changes apply to your 2025 taxes, which you’ll file in 2026. Some items kick in earlier, like R&D write-offs starting from 2022 and bonus depreciation for purchases made after January 19, 2025.
2. Do the math early. New deductions might impact how much tax you owe or how much should be withheld from your paycheck.
3. Talk to your tax pro. Your income, business type, and other details can affect how much you benefit from the changes.
4. Keep good records. To claim deductions for tips, overtime, or business purchases, make sure you have clear and organized documentation.
Summary
The One Big Beautiful Bill isn’t about flashy new perks—it’s about locking in real, lasting benefits. For individuals, that means permanent lower tax rates and meaningful relief on tips, overtime, and family credits. For business owners, it locks in the 20% tax break and boosts your ability to write off expenses quickly. Take time to plan ahead, because smart moves in 2025 could lead to big, beautiful savings down the road.