Both houses of Congress have passed the One Big Beautiful Bill Act (OBBB), and the bill is expected to be signed into law by July 4.

The OBBB made many expiring tax provisions of the Tax Cuts and Jobs Act (“TCJA”) permanent. It also fulfilled some presidential campaign promises, including no taxes on tips and no taxes on overtime pay. Social Security benefits will continue to be taxed, but the OBBB provides a new deduction for seniors.

Click below for descriptions of various tax (and other important business) provisions.

General Tax Provisions Affecting Individuals

• Marginal Tax Rates: Lower tax rates from the TCJA are made permanent.
• Standard deduction: Increased standard deduction from the TCJA is also made permanent.
• SALT: State and local tax deduction cap is increased to $40,000 through 2028.
• Personal Exemption: The personal exemption, which was eliminated in the TCJA, continues to be suspended.
• Child Tax Credit: The child tax credit was slightly increased.
• Alternative Minimum Tax: The million-dollar exemption from the TCJA for the alternative minimum tax was extended.
• Enhanced Deductions for Seniors: Social Security benefits will continue to be taxed, but Seniors will receive an additional standard deduction stacked upon the regular standard deduction.
• Auto Loan Interest Deduction: The OBBB creates a new deduction for auto loan interest up to $10,000, but only for new cars.

General Business and Employment Provisions

• Section 199A Pass Through Deduction: Makes permanent the Section 199A Deduction created by the TCJA.
• R&D Expenses: Restored immediate deductibility for domestic R&D experiences. 
• Section 163(j) Limitation: Modified calculation for determining Section 163(i) business interest limitation. 
• Depreciation Deductions: Made Bonus Depreciation permanent and added more categories of eligible property. 
• Corporate Charitable Deduction: Added a new one percent gross income floor in order for corporations to claim a charitable deduction.
• Payroll Taxes: The OBBB adds new deductions to eliminate or reduce income from tips, overtime pay and Social Security.

International: The OBBB made a number of technical changes to international tax provisions, including changing the calculation of GILTI, FDII, Subpart F, and BEAT. However, the Section 899 “Revenge Tax” which had been included in the House version of the bill was not included in the final signed version of the OBBB. 

Exempt Organizations: Many unfavorable proposals in the House Bill did not make it into the OBBB. But the OBBB did expand the excise tax on excess compensation and created a minimum floor requirement for donors to claim charitable deductions. Specifically, corporations may only claim charitable deductions if their aggregate contributions exceed 1% of their taxable income. For individuals, the floor is 0.5%.

Schools: The OBBB amends the excise tax on investment income for private universities, including a rate increase. It also provides for a nonrefundable credit for donations to scholarship-providing organizations for elementary and secondary schools up to $1,700.

Gift and Estate: Estate, Gift and Generation-Skipping Transfer Taxes: The estate, gift and generation-skipping transfer tax exclusion/exemption amounts were increased to $15,000,000, effective January 1, 2026, and made permanent in the OBBB.

Employee Benefits and Executive Compensation: While many proposed changes to HSAs were not included in the final bill, there are still significant updates that may affect an employer’s benefit plans and offerings. For example, the OBBB expanded eligibility for HSAs and increased the maximum deferrals for Dependent Care Assistance Programs. The OBBB made changes to fringe benefits that employers may offer, such as increased credits for employer-provided childcare, and indexing for inflation the amount an employee may exclude from income for employer-made payments toward student loans under an educational assistance program. Finally, the OBBB aggregates across a controlled group the calculations for determining when renumeration paid to certain executives exceeds $1,000,000, thereby allowing the permissible deduction to be taken among the controlled group members that paid the renumeration.