Understand the changes you need to know, in minutes.

On July 4th, President Trump signed into law “One Big Beautiful Bill”, a sweeping tax reform and spending reconciliation bill. The new bill includes numerous changes across the board— for individuals, businesses, and nonprofits. Some of these changes will almost certainly affect how you run your business and manage your personal finances for years to come, so it’s important that you get familiar with them now.

Our team of financial experts put together the following summary of everything you need to know.

Important Note on IRS & U.S. Treasury Guidance:
This summary is based on the language of the statute as enacted. However, many provisions in the bill will require further clarification from the U.S. Treasury and IRS through regulations, notices, or other forms of administrative guidance. Until such guidance is issued, certain interpretations may remain uncertain or subject to change. We’ve noted areas where open questions exist, but keep in mind that subsequently issued guidance may impact how various parts of the law are ultimately applied.

Published: July 28, 2025

Part 1: What Individuals Need to Know

TCJA Tax Rates Made Permanent
Effective Date: Tax years beginning after 12/31/25
Tax rates from the 2017 Tax Cuts and Jobs Act (TCJA) were originally temporary and set to expire after 2025. These lower rates now become permanent.
The top rate remains 37%. Beginning in 2026, inflation indexing will be based on an older measure for the 10% and 12% tax brackets, which causes brackets to grow more slowly and could result in higher taxes over time.
Standard Deduction & New Senior Deduction
Effective Date: Tax years beginning after 12/31/24
The increased standard deduction—an automatic deduction that reduces taxable income—is made permanent and inflation-adjusted.
- $15,750 (single)
- $31,500 (married filing jointly)
- $23,625 (head of household) in 2025
A new additional $6,000 deduction for seniors is also introduced. This deduction phases out by 6% of adjusted gross income above $75,000 (single) / $150,000 (married filing jointly). Fully phased out for single taxpayers at modified adjusted gross income (MAGI) $175,000 and for married filing jointly at $250,000. Available from 2025 through 2028 to those taking the standard deduction as well as to those who itemize deductions.
SALT Cap Increased
Effective Date: Tax years beginning after 12/31/24
The SALT (State and Local Tax) deduction cap increases from $10,000 to $40,000 starting in 2025. However, the cap is gradually reduced for higher-income taxpayers. Specifically, the $40,000 cap is reduced by 30% of the taxpayer’s modified adjusted gross income (MAGI) that exceeds $250,000 (single) or $500,000 (married filing jointly). The cap cannot be reduced below $10,000, so taxpayers who itemize deductions and have at least $10,000 of SALT expenses will still be eligible to deduct at least that amount. These income thresholds are adjusted upward by 1% annually from 2026 through 2029.
A workaround—known as the Pass-Through Entity Tax (PTET)—continues to allow eligible businesses to deduct state taxes at the entity level.
Important note: the cap reverts back to $10,000 after 2029.

Itemized Deductions and Charitable Contribution Floor

Effective Date: Tax years beginning after 12/31/25

Itemized deductions reduce taxable income by the total of certain personal expenses. Key changes include:

Permanent disallowance of miscellaneous itemized deductions. Includes things like unreimbursed employee business expenses, investment advisory and management fees, safe deposit box fees, and tax preparation fees.
A new overall itemized deduction limitation: itemized deductions are reduced by 2/37 of the lesser of total itemized deductions or the amount by which adjusted gross income (AGI) exceeds the threshold of the start of the 37% tax bracket. Effectively this makes itemized deductions worth less in tax savings for taxpayers in the 37% tax bracket.

Example (Overall Limitation):

If a taxpayer has AGI of $659,350 and $40,000 of itemized deductions, their AGI exceeds the threshold by $50,000 (assuming the start of the 37% bracket is $609,350). Total itemized deductions are reduced by 2/37 × $40,000 = $2,162, lowering their total deductions to $37,838.

New 0.5% AGI floor on charitable deductions.

Example (Charitable Floor):

With AGI of $300,000, a taxpayer must exceed $1,500 in charitable contributions (0.5%) before receiving a deduction.

Key Takeaways and Insights

Bunch Your Charitable Gifts into a Single Year
By “bunching” multiple years of charitable contributions into a single calendar year—such as through a donor-advised fund (DAF)—you can concentrate your giving to maximize itemized deductions in that year. While the 0.5% adjusted gross income (AGI) floor for charitable deductions still applies, bunching allows you to exceed that threshold once, rather than having to surpass it each year. In high-giving years, you may itemize to capture greater overall tax benefits, while in other years, you can revert to the standard deduction and still benefit from the new non-itemizer charitable deduction (up to $1,000 for single filers or $2,000 for married joint filers).

Use Qualified Charitable Distributions (QCDs) if You’re Over 70½
If you’re age 70½ or older, you can direct up to $108,000 (2025) per year from your IRA directly to charity. These QCDs count as charitable contributions but aren’t included in your AGI—so they help you clear the 0.5% floor without pushing your AGI higher and triggering the 2/37 AMT-style limitation on your other itemized deductions.

Family & Dependent Credits
Effective Date: Tax years beginning after 12/31/24
- Child Tax Credit increases to $2,200 (indexed). The credit phases out at higher AGI levels ($400,000 married filing jointly, $200,000 for single filers).
Effective Date: Tax years beginning after 12/31/25
- Dependent Care Credit increases from 35% to 50% of eligible expenses. It phases down gradually as AGI exceeds $15,000, and more steeply above $75,000 (single) / $150,000 (married filing jointly) (but not below 20%).
- Dependent Care Assistance exclusion (e.g., from employer FSA) increases from $5,000 to $7,500.
New Temporary Deductions (2025–2028)
Temporary deductions help reduce taxable income in targeted categories:
- Tip Income Deduction: Up to $25,000; phases out above $150,000 (single) / $300,000 (married filing jointly). This applies for tax years beginning after 12/31/24 and before 1/1/29.
- Overtime Pay Deduction: Up to $12,500 (single) / $25,000 (married filing jointly). This applies for tax years beginning after 12/31/24 and before 1/1/29.
- Car Loan Interest Deduction: Up to $10,000 for U.S.-assembled cars; phases out above MAGI $100,000 (single) / $200,000 (married filing jointly). This applies only to indebtedness incurred after 12/31/24 and before 1/1/29.
Estate and Gift Tax Exemption
Effective Date: Tax years beginning after 12/31/25
Permanently increases the lifetime exemption amount to $15M, indexed annually for inflation.
“Trump Accounts” for Children
Effective Date: Tax years beginning after 12/31/25
Tax-exempt accounts are established for qualifying children:
- $1,000 government-funded contribution (for children born 2025–2028 only).
- $5,000 annual contribution limit (indexed).
- Employer contributions are excluded from income.
Wagering Loss Deduction Limited to 90%
Effective Date: Tax years beginning after 12/31/25
The new law limits the deduction for wagering losses (e.g., from gambling) to 90% of your total losses, and only up to the amount of your winnings.
What’s changing:
- Under prior law, if you broke even (e.g., $100,000 in winnings and $100,000 in losses), you would report $100,000 of gross income and $100,000 of itemized deductions.
- Now, only 90% of your losses are deductible, so in that same scenario, you would have $100,000 of taxable income but an itemized deduction of only $90,000.
Additional notes:
- This deduction remains available only if you itemize your deductions.
- The FAIR BET Act was introduced into Congress on July 7, 2025 that seeks to repeal this 90% cap—but for now, it’s part of the law.

Part 2: Key Business Tax Provisions

Bonus Depreciation
Effective Date: For property acquired and placed in service after 1/19/25
Bonus depreciation allows businesses to immediately deduct a percentage of the cost of qualifying capital assets (like machinery, equipment, or software) in the year placed in service.
Previously, this deduction was set to phase down from 100% in 2022 to 0% after 2026. The new law restores and makes permanent the 100% deduction for eligible property acquired and placed in service after January 19, 2025.
Property acquired, but not placed in service, prior to January 19, 2025 would not be allowed the 100% deduction and would revert to the old phase-down percentages depending on the year the property was acquired.
Section 179 Expensing
Effective Date: Property placed in service after 12/31/24
Section 179 allows businesses to deduct 100% of the cost of qualifying property (e.g., equipment, computers, or machinery) up to a dollar limit. The deduction is phased out when total annual purchases exceed a certain threshold. The deduction is limited to taxable income and can’t create a loss.
The act expands the maximum annual deduction amount from $1.25MM to $2.5MM and increases the phaseout from $3.13MM to $4MM. Both are indexed for inflation.
Key Takeaways and Insights
Mind the “Acquisition” Date
For 100% bonus depreciation you must sign your purchase contract on or after January 20, 2025 (the “acquisition” date), and place the asset in service afterward. Contracts signed earlier fall back to the old phase-down percentages—even if the in service date is delayed.
Be deliberate about contract dates when negotiating equipment or software purchases.
Watch Your State Tax Treatment
Many states decouple from federal bonus depreciation, requiring you to add back the full amount to state taxable income. In contrast, Section 179 is often recognize by states (albeit with potentially different caps).
Before accelerating deductions, run a pro-forma of your federal vs. state tax bills under both bonus and Section 179 elections to see which yields the best overall savings.
Section 174 R&D Expensing
Effective Date: Tax years beginning after 12/31/24
Under prior law (starting in 2022), businesses were no longer allowed to immediately deduct research and development (R&D) expenses. Instead, they had to amortize domestic R&D over 5 years and foreign R&D over 15 years, even if the project ultimately failed. This represented a significant tax burden for innovation-focused businesses.
The new law reverses this policy for domestic R&D:
- Businesses may fully deduct domestic R&D costs in the year incurred.
- Business may also deduct the unamortized portion of section 174 costs that were capitalized in tax years 2022-2024 in either the first tax year beginning after 12/31/24 or ratably over the first two tax years beginning after 12/31/24.
  - Alternatively, qualified small businesses (under $31MM in average annual gross receipts) may amend their previously filed returns for tax years 2022–2024 to claim full deductions for eligible domestic R&D expenses instead of applying the amortization rules.
  - Additional guidance will be needed to determine if taxpayers who have not filed their 2024 tax returns are able to immediately deduct section 174 costs or if this can only be done on an amended return.
- A change in accounting method is required to adopt the new rules (automatic with cutoff method).
Foreign R&D expenses remain subject to 15-year amortization under both old and new law.
Dive Deeper: Section 174 R&D Costs: Your Options Under One Big Beautiful Bill
Qualified Business Income (QBI) Deduction
Effective Date: Tax years beginning after 12/31/25
The Qualified Business Income (QBI) deduction, originally enacted under the 2017 Tax Cuts and Jobs Act (TCJA), allows noncorporate taxpayers—including sole proprietors, partnerships, and S corporation shareholders—to deduct up to 20% of their qualified business income from taxable ordinary income.
Under prior law (2018–2025), taxpayers could claim a QBI deduction equal to the lesser of:
- 20% of QBI earned in a qualified trade or business, plus 20% of qualified REIT dividends and qualified publicly traded partnership (PTP) income; or
- 20% of the taxpayer’s taxable income minus net capital gain.
However, if taxable income exceeded certain thresholds, additional limitations applied. These included:
- A phase-in of restrictions based on the amount of W-2 wages paid and the unadjusted basis of qualified property held by the business; and
- A separate phase-out limitation for income earned in specified service trades or businesses (SSTBs) such as law, accounting, consulting, health, and other professions.
Under the new law (starting in 2026):
- The 20% QBI deduction is made permanent.
- The taxable income thresholds at which the overall limitation applies are increased from $50,000 (single) / $100,000 (married filing jointly) to $75,000 (single) / $150,000 (married filing jointly), indexed for inflation.
- A new minimum deduction of $400 is added for taxpayers with at least $1,000 of QBI from an actively managed qualified trade or business.
Interest Expense Limitation (Section 163j)
Effective Date: Tax years beginning after 12/31/24
Section 163(j) limits the amount of business interest expense that can be deducted to help prevent excessive leverage.
Under prior law:
- Businesses could deduct interest expense only up to 30% of adjusted taxable income (ATI).
- Beginning in 2022, ATI was calculated based on EBIT (earnings before interest and taxes), rather than EBITDA (earnings before interest, taxes, depreciation, and amortization)—making the limitation more restrictive.
Under the new law:
- ATI is now calculated based on EBITDA, which results in a higher ATI base and allows for greater deductibility of interest expense. This change is particularly helpful for capital-intensive businesses.
Certain small businesses under a gross receipts threshold remain exempt from these rules.
Excess Business Loss Rule
Effective Date: Tax years beginning after 12/31/25
The excess business loss (EBL) limitation applies to noncorporate taxpayers and restricts the ability to deduct large business losses against other sources of income (i.e., wages or investment income).
Under prior law: Noncorporate taxpayers could not deduct more than $250,000 (single) / $500,000 (married filing jointly) in net business losses annually (indexed for inflation). Any disallowed loss became a net operating loss (NOL) that could be carried forward.
Under the new law: The same dollar thresholds apply, but the EBL limitation is made permanent, rather than expiring after 2028 as previously scheduled. The thresholds will also be indexed for inflation.
This provision will continue to impact individuals with ownership in multiple businesses or significant losses from pass-through entities
Bonus Depreciation for Qualified Production Property
Effective Date: Applies to construction beginning after 1/19/25 and placed in service before 1/1/31
This provision allows for 100% bonus depreciation on certain nonresidential real property used in qualified U.S. production activities. It is an optional election and separate from standard bonus depreciation rules.
To qualify, the property must:
- Be nonresidential real property located in the U.S. or its territories
- Be used directly in manufacturing, production, or refining
- Have its original use begin with the taxpayer (with limited exceptions)
- Begin construction between 1/19/2025 and 12/31/2028
- Be placed in service by 12/31/2030
Used property can also qualify if it:
- Was not used in a qualified production activity from 1/1/2021 to 5/12/2025
- Was not previously used by the taxpayer
- Meets rules similar to Section 179(d) acquisition standards
Not eligible: property used primarily for office work, R&D, engineering, lodging, parking, sales, or software development.
Qualified production activities must substantially transform tangible property, including manufacturing, refining, chemical production, and agriculture. Retail food and beverage prep is excluded.
The full deduction is allowed for AMT purposes. This class of property is treated separately from other depreciation elections. If the property is no longer used in production within 10 years, a recapture rule applies—tax is triggered as if the property was sold, with gain equal to the full amount of the original deduction.
The election must be made on the original tax return and is irrevocable.
Key Takeaways & Insights
Watch for Aggregation Rules
Many manufacturers operate through multiple related entities—such as operating companies, real estate holding entities, and distribution arms. As the statute is currently written, real estate must be directly owned by the entity engaged in qualified U.S. production activities in order to be eligible for the deduction.
However, it’s possible that Treasury regulations may provide relief by allowing related entities to be grouped or aggregated, provided certain requirements are met. If so, the deduction could still apply in situations where, for example, the real estate is held in one entity and leased to an affiliated production business.
Until further guidance is issued, taxpayers should assume that direct ownership by the qualified production entity is required to claim the deduction.
Clarify “Qualified Production” in Your Industry
The definition of “qualified production activity” will be critical—especially for businesses that both manufacture and provide value-added services (e.g., assembly, packaging, software integration). Early dialogue with a tax advisor can help shape guidance, ensuring your full range of U.S. production activities is covered.
More Guidance is Needed
Significant questions remain—on aggregation, lease treatment, definition of “qualified production,” and more. Keep a close eye on forthcoming Treasury regulations, revenue procedures, and IRS FAQs.
Employer-Provided Family and Childcare Credits
Effective Date: Tax years beginning after 12/31/25
The employer credit for Paid Family and Medical Leave (FMLA) becomes permanent. Childcare facility credit increases from 25% to 40% of expenses (50% for small businesses); cap increases to $500K ($600K for small businesses).
Information Reporting Thresholds
Effective Date: Tax years beginning after 12/31/25
Raises 1099-NEC threshold from $600 to $2,000.
Effective Date: Tax years beginning after 12/31/24
Restores $20K/200 transaction threshold for third-party platforms.
Qualified Small Business Stock (QSBS)
Effective Date: Tax years beginning after 12/31/25
Qualified Small Business Stock (QSBS) under Section 1202 allows eligible shareholders to exclude a portion of the gain on the sale of qualified C corporation stock that meets certain requirements.
To qualify, the stock must generally be:
- Issued by a domestic C corporation with gross assets under $50 million at the time of issuance (or anytime prior to issuance), including the investment in exchange for the stock in question.
- Acquired at original issuance (not from a secondary purchase); and
- Held for a minimum holding period of five years.
Under prior law: Eligible taxpayers could exclude 100% of the gain on the sale of QSBS held for at least five years, up to a maximum of $10MM or 10x the taxpayer’s basis in their shares.
Under the new law, for stock acquired after July 4, 2025:
- The 100% gain exclusion for stock held five years is preserved.
- New, additional gain exclusions are introduced based on shorter holding periods:
  - 75% exclusion for stock held at least four years; and
  - 50% exclusion for stock held at least three years.
Additionally, the asset threshold for eligible corporations is increased from $50 million to $75 million, expanding access to the exclusion for startups and early-stage businesses.
These changes offer greater flexibility for investors by allowing partial tax exclusions with shorter holding periods, while preserving the full benefit for long-term holders.
Section 179D Energy Efficient Commercial Building Deduction
Effective Date: Construction must begin before July 1, 2026 to qualify
Section 179D provides a deduction for commercial building owners and designers of government or nonprofit facilities who install energy-efficient improvements—such as upgraded HVAC systems, high-efficiency lighting, or enhanced building envelopes.
- The deduction is eliminated for property where construction begins after June 30, 2026.
- Projects that begin construction on or before June 30, 2026 remain eligible under the current rules.
Key Takeaways & Insights:
Lock in Construction Start Dates Now
To claim the 179D deduction, ensure that “physical work of a significant nature” begins on your project on or before June 30, 2026.
Bundle Efficiency Upgrades for Maximum Deduction
Since the deduction applies to upgrades in HVAC, lighting, building envelope, and controls, consider packaging multiple systems into a single project. A combined upgrade often yields a larger deduction than isolated, piecemeal improvements—and helps meet the energy‐savings thresholds required for full qualification.
The Definitive Source for Offsetting the Cost of Energy-Efficient Upgrades
Section 179D has long been a trusted incentive for commercial property owners and architects looking to offset the cost of energy-efficient upgrades. Its track record shows:
- 2005 – Enactment: Introduced to spur investment in green building technologies, offering up to $1.80 per square foot for qualifying improvements.
- Lapses & Extensions: Although it lapsed at the end of 2016, strong lobbying by the American Institute of Architects (AIA), real estate developers, and engineering firms led to quick renewals in 2017, 2020 (as part of COVID relief), and subsequent year-end tax bills, ultimately being made permanent and enhanced for tax years beginning after December 31, 2022 (prior to this act).
- Bipartisan Appeal: Both Republican and Democratic policymakers have supported its renewals, viewing it as a market-driven way to reduce energy consumption without new regulatory mandates.
- High Renewal Probability: Given its broad support and proven effectiveness, even if 179D sunsets in mid-2026, there’s still a chance Congress will extend it retroactively or replace it with a similar incentive.

Part Three: Energy Provisions

Wind & Solar Credit Phase-Outs
The bill accelerates the phase-out of tax credits for wind and solar projects and tightens rules around foreign involvement and domestic manufacturing.
Clean Electricity Production Credit (CEPC):
- Wind and solar projects must start construction within one year of July 4, 2025 and be placed in service by December 31, 2027 to qualify.
- Ends the previous rule allowing credits until at least 2032 or until emissions dropped by 75%.
- Disqualifies projects built with help from prohibited foreign entities (PFEs), such as those linked to China.
- Prohibits PFEs from claiming or receiving transferred credits.
- Credit is no longer available for wind and solar leasing arrangements.
- Expands eligibility for bonus credits in nuclear energy communities.
- Starting in 2026, penalties apply for inaccurate supplier certifications.
Clean Electricity Investment Credit (CEIC):
- Follows the same wind and solar phase-out schedule and PFE restrictions as CEPC.
- Energy storage systems at wind/solar sites remain eligible.
- Geothermal systems can qualify even if used by others (e.g., tenants).
- Fuel cell projects no longer need to meet zero-emissions tests if started after 2025.
- New domestic content rules require more U.S.-made components:
  - 45% (27.5% offshore wind) for 2025 projects
  - 50% (35% offshore wind) for 2026
  - 55% for 2027 and beyond
These changes shorten the credit window for wind and solar and prioritize U.S.-based clean energy supply chains.
Expiring Energy Credits
Clean Vehicle, Commercial Clean Vehicle, Hydrogen, Refueling, and Residential Clean Energy credits all begin phasing out between 2025–2027.

Not Included in Final Bill

The following was not included in the final version of the bill, signed into law:

No elimination of tax on Social Security benefits
No limitation or repeal of PTET (Pass-Through Entity Tax)
No restrictions on PTET use by service businesses
SALT cap not fully repealed – instead raised the cap to $40,000.
No higher tax bracket for income over $1 million (or $25 million in some proposals)
No increase in QBI deduction from 20% to 23%
No “revenge tax” or surtax on foreign-owned U.S. businesses
No 21% excise tax on large private foundations or university endowments

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