The U.S. House of Representatives narrowly passed the One Big Beautiful Bill Act (OBBBA), a significant tax and spending bill, by a vote of 215 to 214. Designed to extend and enhance several tax provisions originally enacted under the Tax Cuts and Jobs Act (TCJA), the bill also introduces new deductions aligned with President Trump’s tax proposals, including tax breaks on tips, overtime, and even car loan interest.
The bill now moves to the Senate, where debate and revisions are expected. Some Senators have already expressed concerns, signaling that changes are likely before any final version is signed into law.
Below is an overview of the most significant tax-related provisions in the House version of the bill.
Business tax changes under the OBBBA
100% Bonus depreciation restored
The bill would restore 100% first-year bonus depreciation for eligible property acquired and placed in service after January 19, 2025, and before January 1, 2030. This reverses the scheduled phase-out under current law, which would otherwise reduce the bonus rate to 0% by 2027.
Expanded section 199A deduction
The Qualified Business Income (QBI) deduction for pass-through entities would not only be made permanent but also increased to 23% beginning in tax year 2026. This affects S corporations, partnerships, LLCs, sole proprietors, and the self-employed.
R&D expense deduction reinstated
Businesses could once again deduct domestic research and experimental (R&E) costs rather than amortize them. The change would apply to R&E expenses incurred between 2025 and 2030.
Larger section 179 expensing limit
The bill increases the Sec. 179 expensing cap to $2.5 million and the phaseout threshold to $4 million for property placed in service after 2024, both indexed annually for inflation.
Permanent Excess Business Loss Limitation
The temporary limitation on excess business losses for noncorporate taxpayers (extended initially through 2028 under the Inflation Reduction Act) would be made permanent.
Individual tax provisions
Permanent TCJA income tax rates
The bill would lock in the current individual income tax brackets, including the 37% top rate. Without legislative action, the top rate would revert to 39.6% in 2026.
Standard deduction boost
For tax years 2025–2028, the standard deduction would increase by:
- $2,000 for joint filers
- $1,500 for heads of household
- $1,000 for single filers
An additional $4,000 deduction would be available for qualifying seniors (age 65+) with income below a specified threshold.
Child tTax Credit (CTC) expansion
With inflation indexing, the CTC would be increased to $2,500 per child through 2028 and permanently set at $2,000 thereafter. It would retain the higher income thresholds and continue requiring a Social Security number for both the child and the taxpayer claiming the credit.
Revised SALT deduction cap
The state and local tax (SALT) deduction cap would rise from $10,000 to $40,000 for 2025, phasing out entirely for households earning over $500,000. From 2026 to 2033, the cap would increase by 1% annually.
Miscellaneous itemized deductions
The bill would make permanent the suspension of miscellaneous itemized deductions subject to the 2% of AGI threshold, such as unreimbursed employee expenses and investment fees.
Increased gift and estate tax exemption
With annual inflation adjustments, the unified federal estate and gift tax exemption would rise to $15 million starting in 2026.
New tax breaks introduced by the OBBBA
No tax on tips
Tipped workers would be allowed to deduct tip income, even without itemizing. The provision would expire after 2028 and require a valid SSN.
No tax on overtime pay
Overtime wages would also qualify for an income tax deduction through 2028. This benefit would not require itemizing but would require the taxpayer’s SSN.
Deductible car loan interest
Taxpayers could deduct up to $10,000 in car loan interest for vehicles assembled in the U.S. between 2025 and 2028. Income limits would apply, and nonitemizers would also be eligible.
Charitable deduction for nonitemizers
A new deduction for charitable contributions would allow nonitemizers to deduct $150 (single) or $300 (joint) in donations.
What happens next?
The House-passed version of the One Big Beautiful Bill Act is expected to undergo changes in the Senate. While the tax provisions represent a significant extension of the TCJA framework, the bill also contains spending cuts and budget measures that remain controversial.
We’ll be monitoring the legislative process closely. Contact us for the latest updates on how this bill could affect your tax planning and business strategy.
©2026
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