Tax policy plays a pivotal role in shaping economies and influencing organizational strategies. With the recent tax legislation of the One Big Beautiful Bill Act (OBBBA) through the U.S. House of Representatives, businesses and households need to brace themselves for notable tax changes, affecting everything from state deductions to corporate punishments for non-compliance.
Below, we’ll break down the proposed key adjustments and their potential impact to help you stay informed.
What’s Included in the Latest Tax Legislation
The OBBBA introduces several changes to individual and corporate tax laws while reworking select incentives for clean energy and global commerce. Here’s a closer look at the key elements.
Higher State and Local Tax Deduction Limits (SALT)
Under current tax law, state and local tax deductions (commonly called the SALT deduction) for individuals are capped at $10,000 per year. The OBBBA proposes to increase the SALT deduction limit to $40,000 ($20,000 for married individuals filing separately) with income phaseout limitations for individuals earning more than $500,000. This adjustment provides significant tax relief for high earners in states with high taxes.
Reforms to Business Tax Deductions
- Pass-through Qualified Business Income (QBI) Deduction
The bill permanently raises the QBI deduction from 20% to 23% for qualified businesses, enabling individual owners to save more on their taxable income. However, most specialized service trade or business (SSTB) owners would continue to face limitations.
- Domestic Research Incentives
The OBBBA suspends the required amortization of research and experimental expenditures for businesses from 2025 through 2029, encouraging innovation by permitting immediate deductions for domestic R&D spending.
- Bonus Depreciation Extension
The bill reintroduces 100% bonus depreciation for qualified business assets acquired between January 20, 2025 and December 31, 2029, offering companies immediate tax savings for key investments in operational equipment.
- IRC Section 179 Expensing
Limits increased to $2.5 million (phaseout at $4 million), adjusted for inflation; applies to property placed in service after Dec 31, 2024.
- Corporate Charitable Contributions
Stricter limits now restrict deductions for corporate charitable contributions, requiring a minimum threshold of 1% of taxable income for charitable donations.
Individual Tax Benefits
- Standard Deduction Boost
Temporary increases to the standard deduction grant households an extra $2,000 for joint filers and $1,000 for individuals through 2028.
- Child Tax Credit
Temporarily increased to $2,500 (2025–2028)
- Estate Tax Exemption
Increased to $15 million, indexed for inflation
- Trump Accounts for Kids
The introduction of child-focused Trump Accounts allows contributions to tax-advantaged accounts for children born between 2025 and 2028, encouraging family savings.
Clean Energy Credit Adjustments
While many clean energy tax credits introduced in the Inflation Reduction Act face stringent phaseouts under the OBBBA, nuclear energy receives protected incentives. Renewable energy developers relying on wind and solar face new restrictions, emphasizing uncertainty for future investments.
International Business and GILTI Adjustments
Multinational entities experience changes to the global intangible low-taxed income (GILTI) and base erosion anti-abuse tax (BEAT) deduction rates. These updates maintain deductions at slightly reduced levels, easing concerns of steep tax increases originally scheduled for 2026.
Addressing Unfair International Taxation
Through new Section 899, the U.S. introduces retaliatory tax measures against countries perceived to levy unfair tax treatments. This unprecedented legislation creates economic repercussions for nations enforcing digital services taxes or diverted profits tax.
Who Will Be Most Affected?
Families and Individuals in High-Tax States
The proposed SALT increase delivers substantial benefits to taxpayers in high-tax blue states, reversing part of the restrictions imposed by 2017’s Tax Cuts and Jobs Act.
Technology and Energy Sectors
Corporations focusing on renewable energy production may need to reevaluate investment plans due to the accelerated phaseout schedules and new leasing restrictions outlined in the OBBBA. However, nuclear or domestic R&D companies gain competitive tax advantages.
Import-Export Businesses
By moderating changes to GILTI and BEAT calculations, U.S.-based multinational firms avoid more drastic tax hikes previously expected in 2026.
Balancing Costs and Economic Growth
While advocates of the OBBBA argue that the bill’s provisions aim to bolster economic competitiveness and incentivize domestic production, critics point to its projected $2.4 trillion deficit increase over the next decade. These numbers stem primarily from permanent extensions to tax cuts under the Tax Cuts and Jobs Act and spending increases in defense, infrastructure, and border security.
What Comes Next?
The bill is currently under Senate review, with adjustments anticipated on SALT increases, deficit commitment compromises, and selective energy credit reinstatements. Congress aims to finalize this legislation for the President to sign by July 4.
Contact our tax specialists today to assess how these proposed changes could affect you—and build a strategy that keeps you informed, compliant, and financially prepared.
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