‘One Big Beautiful Bill:’ President Trump Signs Tax and Spending Bill into Law

On Friday, July 4^th, President Trump signed into law the “One Big Beautiful Bill” in a ceremony on the South Lawn of the White House.

After narrowly passing the Senate by a vote of 51-50 on July 1^st, the bill moved back through the House by a vote of 218-214 on July 3^rd. The House vote was mostly along party lines with all Democrats voting against the bill and two Republican representatives joining them as no votes.

The bill contains 870 pages of provisions across various sectors of the economy.

Now that the bill has become law, we wanted to highlight the final version of some of the more significant tax items we have been monitoring. It is important to note that the IRS and Treasury will need to adopt these items into the tax code and provide implementation guidance around the changes. The details of many of the items below may not be fully known until such guidance is provided.

Bonus Depreciation

100% deduction made permanent and available for assets placed in service after January 19, 2025.

Research and Development (R&D) Expense Deduction

100% deduction starting January 1, 2025, made permanent for domestic expenditures. Expenses incurred after December 31, 2021, are eligible to be deducted over a one- or two-year period beginning with the 2025 tax year. For eligible small businesses with average annual receipts under $31 million, an election would be available to apply the new expensing rule retroactively to tax years beginning after December 31, 2021. 

State and Local Tax (SALT) Deduction

$40,000 limit for married filing jointly taxpayers with AGI under $500,000 beginning with the 2025 tax year. Gradual phaseout above $500,000, but deduction cannot fall below $10,000. The $40,000 deduction and $500,000 AGI amounts are adjusted annually for inflation through the 2029 tax year. No changes with respect to the current treatment of Pass-Through Entity Taxes (PTET). The $10,000 limit returns beginning with the 2030 tax year.

Limitation on Business Interest

Reinstates the EBITDA-based limitation starting January 1, 2025: The 30% cap on business interest expense would apply to adjusted taxable income calculated before depreciation and amortization.

Qualified Business Income (QBI) Deduction

QBI was made permanent and retains the 20% deduction for QBI for all eligible taxpayers. 

Standard Deduction

Increase to $15,750 for single filers and $31,500 for joint filers.

Senior Deduction

$6,000 for taxpayers age 65+, phased out at $75,000 (single) / $150,000 (joint) for tax years 2025 through 2028.

Deduction for Qualified Tip Income

Tip deduction capped at $25,000. Deduction reduced by $100 for every $1,000 over $150,000 (single filers) or $300,000 (joint filers). Expires after December 31, 2028.

Deduction for Overtime Pay

Deduction capped at $12,500 (single) and $25,000 (joint). Phase-out begins at $150,000 (single filers) and $300,000 (joint filers) – reduced by $100 per $1,000 over the threshold. As noted at the beginning, the IRS will need to provide employers updated forms on which to report overtime pay to their employees.

Child Tax Credit

$2,200 per child with increases indexed for inflation.

1099 Filing Thresholds

Raises the 1099-NEC and 1099-MISC filing thresholds from $600 to $2,000 for payments made after December 31, 2025.

If you have any questions on how any of the above items may impact you, please do not hesitate to reach out to us today.