President Donald Trump has signed into law the One Big Beautiful Bill Act (OBBBA), enacting the most sweeping set of federal tax reforms since 2017. This legislation makes many provisions of the Tax Cuts and Jobs Act (TCJA) permanent, introduces new deductions and credits, and overhauls critical international tax rules. The new law creates significant planning opportunities for individuals, families, and businesses — while also introducing new compliance risks, particularly for U.S. subsidiaries of foreign-parented companies.
Below is a comprehensive summary of the most relevant provisions. We give special attention to four areas of importance: the expanded estate tax exemption, the temporary increase in the SALT deduction cap, the restoration of immediate expensing for R&D, and the broader application of the Base Erosion and Anti-Abuse Tax (BEAT). These are followed by additional key changes applicable to both individuals and businesses.
Estate and Gift Tax Exemption Permanently Increased
The federal estate and lifetime gift tax exemption will be permanently increased to $15 million per individual and $30 million per married couple starting in 2026. The exemption will be indexed annually for inflation. This change offers long-term certainty for estate planning and provides an extended opportunity for high-net-worth families to engage in tax-efficient wealth transfer strategies, including the use of irrevocable trusts, family partnerships, and valuation discounts.
Temporary SALT Deduction Expansion and Continued Use of PTET Elections
For tax years 2025 through 2029, the deduction cap for state and local taxes (SALT) will be raised from $10,000 to $40,000, with inflation indexing. In 2030, the cap will revert to $10,000. Crucially, the final law does not limit or disallow the use of state passthrough entity tax (PTET) elections, preserving one of the most effective SALT cap workarounds available to owners of partnerships and S corporations. Taxpayers in high-tax states should revisit their current SALT strategies and evaluate the expanded benefits now available under the new cap.
Immediate Expensing of U.S. Research and Experimental (R&E) Costs Restored
One of the most significant business-friendly changes in the bill is the full reinstatement of immediate expensing for U.S.-based R&E expenditures. This change applies retroactively to tax years beginning after December 31, 2021. For small businesses with average gross receipts of $31 million or less, the change may be applied more broadly. Taxpayers may also elect to accelerate amortization of R&E costs incurred between 2022 and 2024 over a one- or two-year period. This reform eliminates the burdensome capitalization rules previously imposed and restores upfront tax savings for innovation-focused businesses. R&E expenditures incurred outside the United States must still be capitalized and amortized over 15 years.
BEAT Expanded: Now Applies to Foreign-Owned U.S. Corporations of Any Size
The Base Erosion and Anti-Abuse Tax (BEAT), a minimum tax regime originally aimed at large multinational corporations, has been significantly expanded. Previously, BEAT applied only to corporations with $500 million or more in average gross receipts. The new law eliminates that gross receipts threshold entirely. Going forward, BEAT may apply to any U.S. corporation that is more than 50% foreign-owned and that makes deductible payments to related foreign parties — such as royalties, interest, service fees, and cost-sharing allocations.
The BEAT rate increases from 10% to 10.5% for tax years beginning after 2025. The definition of modified taxable income has also been broadened, capturing more deductions and making it more difficult to plan around BEAT through ordinary business expenses. As BEAT operates as a parallel minimum tax with limited offsetting credits (R&D being the main exception), the tax can significantly increase the effective tax rate of foreign-owned U.S. subsidiaries. Companies that are majority foreign-owned should immediately assess their intercompany payment structures and model the impact of BEAT under the new law.
Permanent Individual Tax Rates and Brackets
The bill makes permanent the individual tax rates enacted in 2017, along with the inflation-indexing of bracket thresholds. This change ensures ongoing rate stability for individual taxpayers and preserves the benefits of TCJA-era marginal tax rates.
Permanent Standard Deduction with Inflation Adjustments
The increased standard deduction is now permanent, beginning at $15,750 for single filers, $23,625 for heads of household, and $31,500 for married joint filers in 2025. These figures will be adjusted annually for inflation. This change continues to simplify compliance for taxpayers who do not itemize and aligns with the law’s broader policy goal of reducing taxable income through higher base deductions.
Section 199A QBI Deduction Made Permanent with Enhancements
The 20% qualified business income (QBI) deduction under Section 199A is made permanent. The phase-in threshold for specified service trades or businesses is increased to $150,000 for joint filers and $75,000 for other taxpayers. A new minimum deduction of $400 will apply for taxpayers with at least $1,000 of QBI and material participation, even below the full threshold. This permanent extension provides clarity and continued tax relief for passthrough business owners, professionals, and sole proprietors.
Enhanced Credits for Families and Dependents
The child tax credit is increased to $2,200 per qualifying child beginning in 2025 and indexed for inflation. The refundable portion of $1,400 and the higher income phaseout thresholds ($200,000 for single and $400,000 for joint returns) are also made permanent. The dependent care tax credit is expanded from 35% to 50% of eligible expenses, with higher thresholds for phaseout. The maximum excludable benefit under employer-sponsored dependent care assistance programs is increased from $5,000 to $7,500.
Charitable Contribution Changes for Itemizers and Non-Itemizers
Non-itemizing taxpayers will now be eligible for an above-the-line charitable deduction of up to $1,000 (single) or $2,000 (joint). Itemizers are subject to a 0.5% floor on contributions (1% for corporations), reducing the total deduction by a small portion of adjusted income. These changes reward philanthropic giving across a broader segment of taxpayers.
Mortgage, Casualty, and Miscellaneous Deduction Provisions
The mortgage interest deduction on acquisition debt remains capped at $750,000, with the exclusion of home equity loan interest made permanent. The deduction for personal casualty losses is now restricted to federally or state-declared disasters. The law continues the suspension of most miscellaneous itemized deductions under Section 67(g), except for unreimbursed expenses of eligible educators.
AMT Relief and Temporary Senior Deduction
The increased alternative minimum tax (AMT) exemption amounts from the TCJA are made permanent, but the phaseout of the exemption accelerates from 25% to 50% of the excess income above threshold levels. A temporary $6,000 deduction is available for taxpayers age 65 or older from 2025 to 2028, phasing out at $75,000 of modified AGI for single filers ($150,000 for joint).
Temporary Deductions for Tip Income and Overtime Pay
From 2025 through 2028, taxpayers may deduct up to $25,000 in tip income (for those in tipped occupations) and up to $12,500 in qualified overtime pay as above-the-line deductions. These benefits phase out beginning at $150,000 of MAGI ($300,000 joint).
Education-Related Reforms and New Trump Accounts
529 plan distributions may now be used for postsecondary credentialing and additional K–12 educational expenses. The new law also creates "Trump accounts," a form of IRA for minors under age 18. Contributions are limited to $5,000 annually (indexed), and distributions are permitted starting the year the beneficiary turns 18. A one-time $1,000 credit is available for children born between 2025 and 2028 whose accounts are established under the federal pilot program.
Additional Business Incentives and Administrative Updates
Bonus depreciation is made permanent at 100% for eligible property placed in service on or after January 19, 2025. The Section 179 expensing limit is increased to $2.5 million (phased out above $4 million). The employer credit for paid family and medical leave is made permanent. The employer-provided child care credit increases to 40%, with a higher cap of $500,000 ($600,000 for small businesses).
Form 1099-K reporting thresholds are restored to $20,000 and 200 transactions. The general Form 1099 threshold increases from $600 to $2,000 starting in 2027. A 1% remittance transfer tax applies to certain physical payments. The new law also permits installment reporting over four years for qualifying farmland sales to eligible farmers.
The One Big Beautiful Bill Act delivers long-term clarity in key areas of the tax code while introducing new risks and opportunities. If you are a business owner, investor, or part of a multinational structure — or if you're planning for generational wealth transfer — now is the time to reassess your strategy in light of the new law.