Navigating new tax legislation can feel overwhelming. With 940 new pages of added impact through the One Big Beautiful Bill Act (H.R. 1), this year brings some of the most sweeping changes made this century. We break down every important aspect, from how the act affects individual taxpayers and small businesses to its impact on renewable energy incentives and the broader economy.
While you could read the megabill in full to better understand the OB3’s tax implications, we don’t recommend it. Our guide outlines major changes so you can understand how this landmark legislation will affect tax provisions relevant to your financial situation without sacrificing your summer vacation.
OB3 Individual Tax Provisions
Here's a straightforward breakdown of the individual tax provisions introduced by the One Big Beautiful Bill Act. Use these deductions, credits, and incentives designed to help you better manage your taxes and finances.
What individual tax changes does the One Big Beautiful Bill Act include?
Permanent Extensions: Key elements of the Tax Cuts and Jobs Act (TCJA), such as lower individual income tax rates, enhanced standard deductions, increased child tax credits, and elevated thresholds for estate and gift taxes, have been permanently extended.
- New Deductions (2025–2028):
Tip Income: Exempts up to $25,000 of tip income annually from federal income tax.
Overtime Pay: Provides a deduction of up to $25,000 annually for overtime pay earned.
Senior Citizens: Offers seniors an additional deduction of $6,000 for single filers and $12,000 for married couples filing jointly.
Auto Loan Interest: Allows a deduction of up to $10,000 per year for interest paid on loans for U.S.-assembled vehicles.
The IRS provides more details on how to determine eligibility and reporting requirements to secure these deductions. While these benefits are notable, documentation and appropriate filing are necessary to capitalize on these changes.
With the sudden onslaught of modifications, the IRS is still in the process of updating language and procedures around other potential advantages to secure tax savings, including:
Enhanced Child Tax Credit: Increases the credit to $2,500 per child through 2028, after which it reverts to previous levels.
SALT Deduction Increase: Raises the State and Local Tax (SALT) deduction cap initially to $30,000 and subsequently to $40,000 for taxpayers earning under $500,000.
Trump/MAGA Accounts: Introduces government-seeded, tax-deferred savings accounts of $1,000 per child, intended for future educational or other expenses.
Key Takeaway: With expanded deductions, larger credits, and new savings opportunities, this act opens the door for individuals and families to keep more of their money. Taking full advantage of these provisions now can lead to bigger refunds and lower tax bills, but staying up to date on instructions may be a challenge, as instructions are still in flux.
Expect notices and Revenue Procedures to be published by the IRS in the coming months for more guidance on how to implement these advantages.
OB3 Business and International Tax Provisions
Here's what business owners and multinational companies need to know. The following changes can significantly impact your taxes and financial planning. Understanding these new provisions is essential to accurate cash flow forecasting.
While the following statutes are already law, the IRS is still catching up with modifying documentation that formally removes sunset language and adds exact inflation-indexed dollar caps for the following provisions. Forms and computational details are projected to be available in the fall. Until then, businesses can still factor these changes into their plans:
What business and international tax changes are in the act?
Permanent Pass-Through Deduction: Solidifies the 20% pass-through deduction originally from the TCJA, greatly benefiting small businesses.
Full Expensing of Investments: Extends the full expensing provision under Section 179, allowing businesses to immediately deduct the full cost of qualifying production property.
International Tax Adjustments: Modifies key international tax rules, including Foreign-Derived Deduction Eligible Income (FDDEI), Global Intangible Low-Taxed Income (GILTI), Base Erosion Anti-Abuse Tax (BEAT), and permanently solidifies the Controlled Foreign Corporation (CFC) look-through rule.
Revenue Raising Measures: Imposes a new 5% tax on remittances sent abroad, increases taxation on university endowments, and tightens regulations around nonprofit tax exemptions to curb misuse.
Key Takeaway: If you’re a business owner or operate internationally, these updates offer powerful ways to reduce your taxable income. Leveraging the pass-through deduction and full expensing could significantly boost your refund or lower your overall tax liability—if you act strategically.
Updates to documentation are still ongoing, but you can monitor IRS fact sheets for specific guidance on these changes.
Energy and Clean Technology Tax Provisions
If you're invested in renewable energy or considering clean technologies, you'll want to understand how these tax changes impact your business. The details below highlight how the act affects tax credits and incentives, helping you plan your energy investments accordingly.
How does the act affect renewable energy and clean technology?
Renewable Energy Incentive Phase-Out: Incentives for wind and solar energy projects must commence construction by mid-2026 or go online by the end of 2027.
Electric Vehicle (EV) Credits Expiry: EV purchase tax credits will expire in September 2025, while credits for EV charging infrastructure will phase out by June 2026.
Methane Emissions Fees: The introduction of methane emission fees is delayed by ten years, providing extended compliance timelines for industries.
Biofuel Credits Extension: Biofuel production credits are extended through 2031, encouraging continued investment in alternative fuels.
Key Takeaway: The OB3 compresses timelines for clean energy tax incentives—phasing out solar, wind, and EV credits sooner than expected, while extending others like biofuel credits.
Businesses and investors should act quickly to capitalize on remaining opportunities, especially for projects that require long lead times or infrastructure buildout. Strategic timing now could lock in major tax advantages before deadlines hit.
Revenue and Deficit Impact
Beyond tax provisions that have clear-cut implications for your individual filings and business interests, these massive tax reforms are set to shake up the broader financial landscape. If you’re wondering how the OB3 will affect the economy at large, here’s a look at how this legislation impacts federal revenues and deficits in light of what we know now.
What is the financial impact of the One Big Beautiful Bill Act?
Federal Revenue Decrease: Anticipates a reduction in federal revenues by approximately $5 trillion over ten years, with the effective reduction slightly lower at around $4 trillion when accounting for projected economic growth.
Higher Federal Deficits: Projects increased budget deficits totaling around $3 trillion over the next decade. Additionally, the national debt-to-GDP ratio is projected to rise by about $2.8 trillion by 2034.
What this Means for Tax Planning
Big, front‑loaded tax cuts with back‑loaded offsets. Most of the revenue loss arrives in the first five years, while many pay‑fors (e.g., higher remittance taxes, endowment fees) build slowly.
Deficits add pressure on future policy. A $3‑ to $4‑trillion deficit swing over ten years gives Congress a strong incentive to revisit deductions, credits, and business preferences—especially if interest rates stay high.
Taxpayers and advisors should take the following actions to prepare for the economic impact of the OB3:
Time income and deductions to take advantage of the generous early‑year provisions.
Model cash‑flow scenarios that assume some provisions could sunset or be clawed back.
Monitor Treasury/IRS guidance—implementation details (forms, safe harbors) will determine how much of the headline benefit you actually capture.
Key Takeaway: In short, every credible model—official or independent—shows multi‑trillion‑dollar revenue losses and deficit increases, with debt rising by roughly a tenth of the economy. This projection makes proactive tax and cash‑flow planning more valuable than ever. Make a plan before these changes roll out, so there are no unwelcome tax season surprises.
Summary Table of Major Tax Provisions
For a quick glance, here's a simplified breakdown of the main tax provisions included in the One Big Beautiful Bill Act. This summary helps you easily see how these key changes could affect your taxes, business decisions, and financial planning.
Category | Major Tax Provisions & Impact |
Individual | Expanded deductions, enhanced child tax credits, increased SALT deductions. |
Business & Global | Permanent pass-through deductions, extended investment expensing, and international tax adjustments. |
Energy & Clean Tech | Phased-out renewable energy credits, expiring EV tax credits, and extended biofuel incentives. |
Fiscal Impact | Substantial federal revenue cuts, a significant increase in deficits, and national debt. |
Navigate New Tax Provisions with Confidence
The One Big Beautiful Bill Act introduces extensive changes to the U.S. tax code that will impact many aspects of financial planning for individuals, businesses, and the energy sector. Staying informed about these developments helps you effectively navigate and optimize your financial strategies.
At Hall Accounting Company, our experts are ready to guide you through these changes, ensuring you leverage every benefit and maintain compliance. Bookmark this comprehensive guide and reach out to us for personalized assistance in adapting to these significant tax updates!
One Big Beautiful Bill Tax Provision Frequently Asked Questions
The One Big Beautiful Bill Act brings sweeping tax changes—these FAQs break down who benefits, what’s temporary, and how it could shape your finances and the broader economy.
1. Is the enhanced child tax credit permanent?
No, the increased credit is temporary, ending in 2028.
2. How will the SALT deduction changes impact taxpayers?
Taxpayers earning less than $500,000 will benefit from the increased deduction caps, initially set at $30,000 and later increased to $40,000.
3. What will happen to EV tax incentives?
These incentives are set to expire in September 2025, significantly affecting consumers considering electric vehicles.
4. Does the act make significant changes to international corporate taxes?
Yes, it implements notable changes to provisions such as GILTI and BEAT and permanently adopts the CFC look-through rule, altering tax obligations for multinational companies.
5. How will the Big Beautiful Bill affect the federal deficit?
In short, it will substantially increase it. Even when accounting for projected economic growth, the deficit still rises by $2.4 trillion.