The recently passed “2025 Reconciliation Bill,” officially titled “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14” or the “One Big Beautiful Bill Act” (OBBBA), and signed into law on July 4, 2025, marked a significant transformation of the U.S. tax code. This comprehensive legislation extends and modifies provisions from the 2017 Tax Cuts and Jobs Act (TCJA) while introducing a host of new tax policies that impact both individuals and businesses.
Running a business is challenging enough without having to decode complex tax legislation. But when sweeping changes like the “One Big Beautiful Bill Act” (OBBBA) become law, understanding their impact on your operations isn’t optional—it’s essential for protecting your bottom line and positioning your business for growth.
At Archer Lewis, we understand how overwhelming major tax changes can be. That’s why we’re breaking down what business owners need to know about the OBBBA—so you can focus on what really matters: running and growing your business.
Key Changes for Individuals
The OBBBA introduces several provisions aimed at delivering tax relief to individuals, particularly middle-class families, while also implementing measures that affect high-income earners and specific groups:
- Permanent Extension of TCJA Individual Tax Rates: The bill solidifies the lower individual income tax rates from the 2017 TCJA, preventing their scheduled expiration at the end of 2025. This ensures continued tax relief across income brackets.
- Increased Standard Deduction: The standard deduction, significantly increased under the TCJA, is now permanent and further raised to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly, with annual inflation adjustments. A temporary $6,000 bonus deduction for seniors over 65 is available through 2028, phasing out for higher earners.
- Individual State and Local Tax (SALT) Deduction: The SALT deduction cap is raised from $10,000 to $40,000 for taxpayers earning less than $500,000, with a 1% cap increase till 2029.
- No Tax on Tips and Overtime: Through 2028, workers in tipped occupations can deduct up to $25,000 in tip income, and overtime workers can deduct up to $12,500, subject to income limits ($150,000 for single filers, $300,000 for joint filers).
- Trump Accounts: A new tax-deferred savings vehicle for children under 18, allowing annual contributions up to $5,000, with a one-time $1,000 government deposit for newborns born between 2025 and 2028. These accounts support education, small business investments, or first-home purchases.
- Charitable Deductions: Non-itemizers can claim a charitable deduction of up to $1,000 (single) or $2,000 (joint).
- Child Tax Credit and Other Family Benefits: The child tax credit is permanently increased by $200, with inflation adjustments. Enhancements to employer-provided childcare credits and adoption credits also support families.
- Adoption Tax Credit: The OBBBA enhances the adoption tax credit, increasing the maximum credit to $16,810 per child (up from $14,890 in 2024) for qualified adoption expenses, with inflation adjustments. The credit is now fully refundable for families with incomes below $250,000 (single) or $500,000 (joint), phasing out thereafter.
- Car Loan Interest Deduction: A new provision allows taxpayers to deduct up to $10,000 in interest on car loans for vehicles purchased after January 1, 2025, provided the vehicle is used primarily for personal purposes. This deduction is capped at $150,000 in loan principal and phases out for incomes above $100,000 (single) or $200,000 (joint).
- 529 Plan Enhancements: The bill expands 529 plan benefits, allowing tax-free withdrawals of up to $15,000 annually for private K-12 education (previously $10,000) and introducing a new provision for up to $10,000 in rollovers to Roth IRAs without penalty, provided the account has been open for at least 15 years.
Key Changes for Businesses
The OBBBA includes significant tax incentives for businesses, particularly small businesses and manufacturers, while also introducing new complexities:
- 100% Bonus Depreciation Restored: Businesses can immediately expense qualifying assets placed in service after January 19, 2025, with permanent provisions for capital investments and specific benefits for manufacturing through 2032.
- R&D Expensing: Immediate expensing of domestic research and development (R&D) costs is restored and made permanent for tax years beginning after December 31, 2024 (retroactive to 2022 for eligible small businesses)
- Qualified Business Income (QBI) Deduction: The Section 199A deduction for pass-through entities is made permanent at 20% (the House proposed 23%, but the Senate retained the original rate). This benefits small businesses and partnerships.
- Section 179 Expensing: The expense cap for depreciable business assets is increased to $2.5 million, with a phase-out threshold of $4 million, effective for 2025 and adjusted for inflation thereafter.
- Business Interest Deduction: The business interest limitation under Section 163(j) is modified to use EBITDA (including depreciation and amortization) for calculations, allowing greater deductions through 2029.
- Allocation of Deductions to Foreign Source Net CFC Tested Income (Formerly Known as GILTI): For foreign tax credit purposes, the OBBBA modifies the allocation of deductions to foreign source net Controlled Foreign Corporation (CFC) tested income, previously referred to as Global Intangible Low-Taxed Income (GILTI). The bill allows a 50% deduction for foreign source net CFC tested income, increasing to 60% for tax years after 2027, reducing the effective tax rate on such income. This change aims to enhance the competitiveness of U.S. multinationals by improving foreign tax credit utilization.
- One Percent Floor for Corporate Charitable Contributions: The OBBBA introduces a 1% floor for deductions of corporate charitable contributions, meaning corporations can only deduct charitable contributions exceeding 1% of their adjusted taxable income. This provision, effective for contributions made after December 31, 2024.
- Clean Energy and Other Provisions: The bill phases out certain clean energy tax credits from the Inflation Reduction Act, such as electric vehicle and charging credits, while extending biofuel credits to 2031. It also introduces a 1% tax on remittances and modifies international tax rules, including GILTI and FDII.
Impacts and Considerations
The OBBBA is one of the most significant tax reforms since the TCJA, with far-reaching implications. Its impact on business cash flows and individual wealth planning is significant. Taxpayers should model scenarios for effective tax strategies. Businesses should consult advisors to navigate retroactive provisions and new opportunities, such as bonus depreciation and R&D expense. Businesses can file amended returns to claim refunds for previously paid taxes, while high-net-worth individuals should reassess estate planning due to the increased estate tax exemption to $15 million per individual.
Why business owners & individuals choose Archer Lewis
At Archer Lewis, we offer integrated tax and financial solutions specifically designed for growing businesses. Our team provides clear, proactive guidance whether you’re a small business owner or managing complex operations across multiple locations.
We combine deep tax expertise with practical business understanding to deliver results that matter.
Our services include:
- Strategic tax planning for business owners navigating complex legislation
- Comprehensive business accounting that captures all available deductions and credits
- Fractional CFO services for growth planning and cash flow optimization
- Integrated personal and business tax preparation that maximizes overall benefits
- Ongoing compliance support that keeps you focused on business operations
With Archer Lewis, you gain a dedicated team that understands both tax law and business success, and works with you to turn complex legislation into competitive advantages.
Contact us today for a free consultation. We’ll help you build integrated tax strategies that support your growth goals—and give you confidence that you’re making the most of every available opportunity.
Looking Ahead: A Series of In-Depth Blog Posts
Given the complexity and breadth of the OBBBA, we will break down its provisions in a series of blog posts to provide clarity and actionable insights. Upcoming topics include:
- Individual Tax Strategies: Exploring deductions for tips, overtime, and SALT, as well as Trump Accounts and charitable giving.
- Business Tax Opportunities: Detailing bonus depreciation, R&D expense, and QBI deductions for small businesses and manufacturers.
- Payroll: The payroll changes aim to provide tax relief for workers in specific sectors while incentivizing employer-provided benefits like childcare. However, they introduce significant administrative complexity.
- Estate and Wealth Planning: Analyzing the increased estate tax exemption and its implications for high-net-worth individuals.
- Industry-Specific Impacts: Examining how sectors like manufacturing, real estate, and technology are affected.
- International and Energy Tax Changes: Covering modifications to GILTI, FDII, and the phase-out of clean energy credits.
Stay tuned for these detailed analyses to help you navigate the opportunities and challenges presented by the One Big Beautiful Bill Act. For personalized advice, consult with a tax professional to align these changes with your financial goals.
