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One Big Beautiful Bill (OBBB): What It Means for Individuals and Businesses

December 18, 2025

Contributed by: Faw Casson.

A Clear Overview for Firms Supporting Clients Through Tax Law Changes. The recently enacted “One Big Beautiful Bill” brings significant changes to the tax landscape that firms should understand and communicate to clients. From permanent adjustments to individual tax rates and deductions to enhanced business incentives and reporting thresholds, this legislation creates opportunities—and compliance considerations—for both individuals and businesses. This publication breaks down the most important provisions, explains why they matter, and offers actionable insights firms can use when advising clients on planning strategies.

Why This Matters for Your Practice

These tax law changes affect core areas of tax planning, from everyday deductions and retirement savings to business investment incentives and reporting requirements. For individuals, permanent lower rates and expanded deductions can impact cash flow and household tax burden. For businesses, clarified expensing rules and simplified reporting thresholds can influence investment, compliance workload, and operational choices. Firms that proactively understand and communicate these changes can add substantial value to client relationships while helping clients optimize tax outcomes.

Impact on Individuals: Key Provisions and Planning Insights

Permanent Lower Tax Rates and Deductions

The bill keeps the Tax Cuts and Jobs Act (TCJA) tax brackets in place indefinitely, with rates ranging from 10% to 37%. It also fixes and indexes standard deductions for inflation at:

$15,750 (single)
$23,625 (head of household)
$31,500 (married filing jointly)

These baseline thresholds help in year-end tax planning and estimated tax calculations.

Temporary Deductions (Through 2028)

Several deductions returning for a limited period create opportunities for eligible individuals:

Tips Deduction: Up to $25,000/year
Overtime Deduction: Up to $12,500 (single) or $25,000 (joint)
Car Loan Interest: Deductible for new U.S.-assembled vehicles (capped at $10,000/year)
Senior Deduction: $6,000 additional deduction for taxpayers 65+ under certain income limits

Advisors should work with clients considering overtime-heavy compensation, vehicle purchases, or those nearing retirement thresholds.

Family and Donor Credits

Firms should note expanded or enhanced credits that benefit families and charitable planners:

Child Tax Credit: $2,200 per child (indexed for inflation)
Charitable Contributions: Non-itemizers can claim up to $1,000 ($2,000 joint) beginning in 2026
Adoption Credit: Up to $5,000 now refundable

These provisions may factor into cash-flow strategies and year-end tax planning.

Retirement and Health-Related Changes

Trump Accounts: New tax-deferred savings vehicles for minors, with contributions allowed by parents, employers, and the Treasury. Withdrawals permitted at age 18.
HSA and FSA Enhancements: Broader plan eligibility, telehealth expense coverage, and higher dependent care FSA caps ($7,500 starting 2026).
Employer Student Loan Assistance: Permanent provision allowing up to $5,250/year tax-free assistance.

These provisions merit discussion in financial planning reviews.

Clean Energy Credits

Some clean energy tax incentives from the Inflation Reduction Act are being phased out or eliminated. Clients considering solar installations or electric vehicle purchases should evaluate timing relative to available credits.

Impact on Businesses: What Firms Need to Know

Deductions and Expensing Rules

The bill maintains or enhances key business deductions:

Qualified Business Income (QBI): 20% deduction for pass-throughs remains permanent.
Bonus Depreciation: 100% expensing restored and made permanent for eligible property placed in service after January 19, 2025.
Section 179 Expensing: Increased to $2.5 million (phase-outs begin at $4 million), with future inflation indexing.

These provisions support capital investment planning and cash-flow forecasting for clients making equipment or property purchases.

R&D and Interest Deductions

R&D Expenses: U.S.-based R&D fully deductible in the year incurred (foreign R&D still subject to 15-year amortization).
Interest Deductions: Return to an EBITDA-based limitation benefits businesses with interest expense.

Firms should update planning models to reflect these treatment changes.

Losses and Reporting Thresholds

Excess Business Loss Limits: Made permanent, with unused losses carried forward.
1099 Reporting Simplified: The threshold for 1099-K reporting reverts to $20,000 and 200+ transactions.
1099-NEC and 1099-MISC: Required only for payments of $2,000+ (effective 2026 and inflation-adjusted after 2027).

These adjustments reduce administrative burdens for many small business clients.

Opportunity Zones and QSBS

Opportunity Zones: Permanently part of the tax code with stricter definitions for qualifying low-income communities (effective 2027).
Qualified Small Business Stock (QSBS): Tiered gain exclusion now available (50% at 3 years, 75% at 4, 100% at 5), with expanded caps and income limits.

Clients focused on long-term investment or startup growth should revisit structuring choices in light of these changes.

Conclusion: Planning Ahead With Confidence

These tax law updates introduce permanence to many provisions that were previously set to expire, while also creating new incentives and compliance considerations. Firms that understand the nuances of individual and business impacts can help clients make informed decisions on timing, deductions, credits, and investment strategy. Leveraging these changes in proactive planning discussions will strengthen client relationships and position firms as trusted advisors in a complex tax environment.

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