07/11/2025
The One Big Beautiful Bill Act (OBBBA), or the Big Beautiful Bill, is a budget reconciliation law passed by the 119th United States Congress containing tax and spending policies that form the core of President Donald Trump's second-term agenda. Here are the key changes:
EMPLOYEE TAX CHANGES
1. No Federal Tax on Tips & Overtime
o Effective July 2025, tips and overtime earnings are exempt from federal income tax.
2. Child Tax Credit Increased
o Raised to $2,200 per child under 17.
3. SALT Deduction Cap Increased
o Cap rose from $10,000 to $40,000 for households earning under $400K.
4. Senior Tax Credit
o Adults aged 75+ with an annual income under $75K can claim up to $6,000 in refundable credits.
BUSINESS TAX CHANGES
1. 100% Bonus Depreciation
o Full expense of qualified capital assets from Jan 19, 2025 through 2029 (2030 for long-term assets).
2. R&D Expensing
o U.S.-based R&D costs are now fully deductible in the year incurred.
3. Section 199A Deduction Made Permanent
o 20% deduction on qualified income for S Corps, LLCs, and sole proprietors is now permanent.
4. Business Interest Deduction Expanded
o Based on EBITDA instead of EBIT, allowing larger deductions.
5. Clean Energy Incentives Reduced
o Reduction or elimination of many federal EV and renewable energy credits.
6. ERTC Fraud Penalties Increased
o Penalties up to $200K or 75% of falsely claimed credit.
RECOMMENDATIONS
For Employees:
· Confirm payroll adjustments for tax-exempt tips/overtime.
· Update W-4s.
· Evaluate child tax credit eligibility.
For Businesses:
· Prioritize capital investments to benefit from bonus depreciation.
· Review entity structure to maximize pass-through deductions.
· Ensure compliance with ERTC and clean energy rule changes.
Consult with a tax professional to align your strategy with the 2025 tax law changes.
Please call Assured for Tax Saving strategies for your particular situation at 972-242-5700.
