07/05/2025
Dear Client …
Congress has passed the One Big Beautiful Bill (OBBB), a sweeping piece of legislation that introduces significant changes to tax laws, retirement planning, business incentives, and more. We’ve reviewed the full text of the bill and are providing this summary to keep you informed and prepared.
Below are the key provisions that may affect you or your business:
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🔹 Individual Tax Changes
• New Standard Deduction Increase
The standard deduction has been increased across the board:
o Single: $15,000
o Married Filing Jointly: $30,000
o Head of Household: $22,500
• Expanded Child Tax Credit
The Child Tax Credit is now:
o $3,000 per child under age 18
o Fully refundable
o Paid in monthly advance installments (opt-out available)
• Capital Gains Tax Threshold Adjustment
Long-term capital gains rates have changed:
o 0% up to $100,000 (MFJ)
o 15% for income $100,001 to $500,000
o 20% above $500,000
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🔹 Small Business & Corporate Provisions
• Corporate Tax Rate
A flat 25% corporate income tax rate replaces the tiered system.
• Section 199A (QBI) Deduction Modified
For pass-through businesses:
o QBI deduction retained, but capped at $400,000 (MFJ), $200,000 (Single) of taxable income
• Bonus Depreciation Extended
100% bonus depreciation is extended through 2027, with a gradual phase-down afterward.
• Small Business Startup Credit Doubled
The startup cost deduction limit is increased to $10,000, with a $50,000 phase-out threshold.
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🔹 Retirement & Savings
• New “Flex Roth” Accounts
Employers may now offer Roth-style contributions in SIMPLE and SEP IRAs.
• Required Minimum Distribution (RMD) Age Raised
The RMD start age increases to 75 beginning in 2026.
• Student Loan Matching Contributions
Employers may match employee student loan payments with retirement plan contributions.
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🔹 Green Incentives & Energy Credits
• Clean Energy Investment Credit
Extended through 2032. Available for solar, wind, and battery storage investments.
• EV Credit Expanded
Up to $7,500 credit for qualifying new electric vehicles
o Includes income and price limitations
o Now available at point-of-sale
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🔹 IRS Modernization & Enforcement
• E-File Thresholds Lowered
Most filers with 10+ returns must file electronically.
• Increased IRS Funding
For customer service, audit improvements, and digital tools.
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🔹 Estate & Gift Tax Updates
• Lifetime Exemption Reduced
The estate and gift tax exemption will drop to approximately $6 million per person beginning in 2026 unless further legislation is enacted. Consider gifting strategies now.
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✅ Action Items
• Consider revising your withholding or estimated payments based on new brackets.
• Evaluate your estate plan while the higher exemption still applies.
• Small businesses should review entity choice and QBI eligibility.
• Schedule a meeting to review retirement plan design and employee benefits.
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We will continue to monitor implementation guidance and update you as IRS regulations and FAQs are released. In the meantime, please don’t hesitate to contact us to discuss how these changes may affect your specific situation.
