What are the biggest changes in the Big Beautiful Bill Act?

Reinstatement of 100% bonus depreciation, extension of the QBI deduction at the 20% level, restoration of Section 174 immediate R&D expensing, and various individual provisions including changes to charitable deduction rules. Effective dates vary — some retroactive, some prospective.

How does the act affect business owners?

Most pass-through owners benefit through QBI extension and bonus depreciation. R&D-heavy businesses regain immediate expensing of domestic research costs (a major cash-flow win after years of mandatory amortization). C-corps see less direct benefit but can still leverage bonus depreciation.

Should I file an amended return for 2024 R&D expenses?

Possibly — depending on the final transition rules, taxpayers may be able to recover previously capitalized 174 costs via amended returns or a Form 3115 method change. We are running this analysis client-by-client; the answer depends on entity type, prior elections, and cash position.

The Big Beautiful Bill Act

Introduction

On July 4, 2025, President Trump signed into the law the bill formerly known as the One Big Beautiful Bill Act following Congress’s passing on July 3rd.

This comprehensive legislation includes numerous tax provisions making permanent some of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire at the end of this year and goes further in other areas.

Individual Tax Provisions

Extension of TCJA Provisions

Most individual provisions from the Tax Cuts and Jobs Act of 2017 have been made permanent, including:
- Current tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%)
- Increased alternative minimum tax exemption and threshold amounts
- Limitations on mortgage interest and casualty loss deductions
- Elimination of personal exemptions
  - Includes $6,000 deduction for seniors 65 and older after 2024 but before 2029. This deduction is phased out for individuals whose modified adjusted gross income exceeds $75,000 (individual) or $150,000 (joint filers)

SALT Deduction Cap

The state and local tax deduction cap increases to $40,000 for 2025, with a one percent increase each year through 2029 before returning to the $10,000 limit in 2030.
The cap is reduced by 30% of the amount by which the taxpayer’s modified adjusted gross income exceeds $500,000 (for 2025, with a one percent increase annually through 2029).

Estate Tax

The basic exclusion amount increases to $15 million for decedents dying in 2026 ($30 million for joint filers), adjusted for inflation thereafter.

Standard Deduction

The standard deduction has been increased for 2025 to $31,500 for joint filers, $23,625 for heads of households, and $15,750 for single taxpayers and married taxpayers filing separately. These levels are subject to inflation after 2025.

Itemized Deduction Limitation

The bill reintroduces the limitation on itemized deductions (known as the “Pease” limitation) for taxpayers in the 37 percent income tax bracket, effective after 2025.
This provision will reduce the benefit of itemized deductions for higher-income taxpayers.

Automobile Loan Interest

A new deduction of up to $10,000 for interest paid on automobile loans is available for tax years 2025 through 2028.
The deduction applies only to cars purchased after 2024 and is available to both itemizers and non-itemizers.

Child Tax Credit

The Child Tax Credit has been permanently increased to $2,200 (subject to inflation adjustments), with the refundable portion capped at $1,400.

New Deductions for Tips and Overtime

A new deduction for tip income, capped at $25,000, phasing out when modified AGI exceeds $150,000 ($300,000 for joint filers).
A new deduction for overtime pay, capped at $12,500, phasing out when modified AGI exceeds $100,000 ($200,000 for joint filers).
Both deductions are available through 2028 and do not require itemizing.

Business Provisions

Bonus Depreciation

100% bonus depreciation is made permanent for property acquired after January 19, 2025.

Research and Experimental (R&D) Expenditures

The deduction for domestic research and experimental expenditure costs is permanently reinstated for expenses incurred after 2024.
Small businesses with average annual gross receipts of $31 million or less can elect to claim the deduction retroactively to 2022.

Qualified Business Income Deduction

The Section 199A qualified business income deduction is made permanent.

Qualified Small Business Stock

The bill introduces a tiered exclusion system for qualified small business stock acquired after the bill’s enactment:
- 50% exclusion for stock held for 3 years, 75% for 4 years, and 100% for 5+ years.
The total exclusion amount increases from $10 million to $15 million, and the qualified small business asset limitation rises from $50 million to $75 million, both subject to future inflation adjustments.

International Provisions

Key international provisions have been extended, including the deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI).
The FDII rate changes to 33.34% and the GILTI rate to 40% after 2025.

GREEN ENERGY CHANGES

Many green energy tax credits established under the Inflation Reduction Act of 2022 will be terminated, generally after 2025, including:
- Clean vehicle credits
- Energy efficient home improvement credits
- Alternative fuel refueling property credits
- Residential clean energy credits

Summary

As you can see, this bill includes many modifications to the tax code including provisions beyond what we’ve highlighted above.

Our team is already identifying strategic opportunities for clients in various situations—from business owners considering capital investments to benefit from permanent bonus depreciation to individuals who may benefit from the new deductions for tips and overtime income.

If you’re interested in understanding how these changes may affect your specific situation, please don’t hesitate to contact us.

The Big Beautiful Bill Act – News to Know